Breakdown on the road

If the tenant has a breakdown on the way, this is covered by additional insurance. In the case of private hire, however, this can cause problems for the lessor. The question then is whether the lessor has taken out breakdown cover and whether it is registered to a name or a vehicle.

Damage with a shared car: what are the consequences?

Additional insurance necessary

Because damage to your own vehicle and damage caused to others while renting out your car is excluded from your own car insurance, a separate additional insurance will always have to be taken out for this. There are rental agencies, such as Snappcar, that only mediate including this additional insurance (through Centraal Beheer). For any other intermediaries and private rentals, you will have to arrange this on your own initiative. As a rental agency, do you forget to arrange such additional insurance or do you think it is not so important? Then, in the event of damage to your own car, no payment will be made and your own insurer will recover the damage paid to third parties from you. This is because your own insurer excludes coverage for damage during rental.

All claims are registered in your name

In order to reduce or prevent the risk of fraud, every damage in the Netherlands is registered in a database intended for this purpose. Every damage driven and suffered is registered in the name of the licence plate holder in the Fraude Information System Holland(FISH).
With a bit of bad luck during your rental, you can end up with a lot of damage in your own name in this database, while you were not responsible for that. These registered claims in your name can result in your application for a new insurance not being accepted, or accepted with restrictive conditions. It is irrelevant whether this concerns a car insurance or, for example, a household insurance. For each new insurance, the Fraud Information System is consulted.

Your own insurer will recover from you

If the hirer has caused damage to others with your car, the victim - or his insurer - will initially turn directly to your (third-party) motor insurance company on the basis of the direct right of action. One may turn directly to your insurer without first notifying you.
The details of your insurer can be requested from the Dutch Road Traffic Authority (RDW). The RDW registers whether and where the cars on the road are insured. Please note that your own car insurer is listed here and NOT the insurer where the car is insured during the rental. If the driver of your car (the hirer) is liable, your insurer will have to compensate the victim in full. And because you are the contracting party, your insurer will then have to reclaim the damage and all costs incurred from you personally, because damage during rental is excluded from cover.
If you have taken out additional insurance for the rental period, you can turn to that insurer and ask them to deal with the matter. Whether or not they do so (immediately), you will remain responsible for repaying your insurer for the damage until that time.

Example:

Suppose that the hirer of your Opel drove into the back of a Fiat and caused €5,000 damage.
The insurer of the Fiat will then check with the RDW and sue your insurer.
Your insurer will pay the €5,000.00 to the victim or his insurer and will then recover the paid out amount of damage from you personally because there was no cover (during the rental). You could then turn to the additional insurer and ask them to handle this claim, but during this process the claim will remain with you. With a small car damage this might not be a problem, but with a personal injury of thousands of Euros it becomes a different story.

Snappcar states that the additional insurer deals with the damage immediately and that it almost never happens that your own insurer is sued.
Alpina, however, strongly doubts this since (the insurer of) the victim will always send a liability claim to your insurer using the data from the RDW (where only your own insurer is listed). Your insurer may not refer the victim to another insurer, but will have to pay the damage itself and then recover it from you for lack of insurance coverage (during rental).

Less no-claim, more premium

As soon as your insurer is held liable by a victim or his insurer, the damage will immediately be registered as a 'fault damage' unless it is irrefutably clear that the driver is not liable. This culpable damage registration has immediate consequences for your lossless years and your no-claim discount and may also result in a higher premium. Later on, it may be possible to reverse this administratively, but during this period you will be confronted with a higher premium. If you are unable to pay this higher premium, it may result in a registration as 'defaulter' which in turn may cause the coverage to be suspended. As a result, you run the risk of a hefty fine from the RDW due to the uninsured vehicle.
Because your insurer is not allowed to refer the victim, the claim will have to be dealt with anyway. Perhaps the additional insurer will reimburse the damage at a later time, but insurers are not waiting for unnecessary administrative actions and it remains to be seen how this will be dealt with (in the long run).

Exclusions

If you have plans to hire out your car, check carefully in advance what differences there are in coverage between your own insurance and the additional insurance you take out during the hire (whether or not via the intermediary). It may be that the additional insurer - who covers the damage during the rental - applies certain exclusions, restrictive conditions and/or extra excess es.

Own risk

At Centraal Beheer (the additional insurer that Snappcar and MyWheels, among others, work with) the amount of the deductible in case of hull damage is 250 Euros. Snappcar states that this excess is not charged to the renter, but if the renter has caused damage to your car, whether by his own actions or not, the additional insurer who covers the damage during the rental period will pay the damage to you minus the excess. You will have to pay this excess to the garage where your car is being repaired. The question is how quickly Snappcar will pay this excess. Snappcar indicates that the excess is for the account of the renter, but the question is whether Snappcar guarantees this and how quickly the payment will be made.

The situation may also arise that the tenant does not want to pay the excess because he does not consider himself liable. If the intermediary does not act as guarantor and the other party is actually liable, the excess will have to be recovered from the other party.
The question is then who will take on this if the car is only third-party insured without recourse or legal expenses coverage. Perhaps the intermediary will do this, but Alpina wonders whether they have the knowledge and resources available to do so. If, for whatever reason, the intermediary does not recover the excess, it will cost you time and money to recover the excess yourself. Incidentally, there is a service provider that handles non-covered but recoverable claims free of charge. More information can be found via this link

Current value instead of new value: difference remains for own account

With your own insurer, you have the option of insuring a new(er) car based on its new value. In the event of a total loss or theft, the new-for-old value will be reimbursed on the basis of this new-for-old value arrangement, with or without the deduction of a small percentage of depreciation.
The insurer who insures your vehicle during the rental period (whether or not arranged through the intermediary) always handles such a claim based on the current value.
If the hirer drives your car into a total loss, you will not be paid the new value, but the current market value, and you could lose thousands of euros as a result. Your own insurance company will not be able to reimburse you for the difference, because they exclude damage during the rental period. In short, you can be left with an enormous loss.

If the hirer totals your vehicle, no equivalent vehicle can be purchased for the amount paid (the current market value). The difference between the current market value and the purchase value of a replacement vehicle of equal value cannot be recovered from the renter.

No cover if the hirer allows another driver to drive

The intermediaries indicate that the additional insurance only provides cover if the registered driver is driving the vehicle. If the hirer allows another driver to drive the vehicle, the additional insurance will not provide cover for damage either.
In any case, your own insurance will not provide cover because it excludes damage during rental.
Because you, as a rental company, are not present during the drive(s), you unfortunately have no control over who lets the renter drive your car. There does not have to be any malice either. Perhaps the hirer is not feeling well and lets the partner drive. If any damage occurs, it will not be covered and no insurer will pay for it.
It can also happen that the registered hirer drives your vehicle, but under circumstances where the damage is still excluded by the insurer. This applies, for example, when the damage occurs if the hirer drives without a valid driving licence, if he/she intentionally caused the damage by participating in a race or if the driver has a blood alcohol level that is too high. All circumstances which the insurer excludes and in which the damage to your car will not be compensated.
In short, a big risk for you as a rental company because in that case you will be stuck with the damage or you will have to - whether or not through a lawyer - go after your money with the renter.

Always make a note of any damage

It is important that the hirer and the person hiring out the vehicle properly assess the damage, if any, before the vehicle is handed over or taken back in order to avoid any subsequent disputes.

Tenant must cooperate in case of damage

The hirer has no interest in your vehicle and therefore there is no guarantee that, in case of damage, the damage form will be filled out (properly, fully and quickly) and that the hirer will provide full cooperation. However, the claim form and the cooperation are essential in the claim process. As long as the insurer has no claim form, no compensation will be paid. If the claim form is incorrectly or incompletely filled in and the tenant's cooperation is minimal, this may even result in you being left with (part of) your claim because the insurer is unable to settle and/or recover the loss.

What maintenance risks do you face when renting out your own car?

Tenant's driving behaviour

As a lessor, you do not know how the lessee handles your vehicle(slipping tyres, changing gear too quickly/slowly, etc.). Any damage caused by this is not always immediately noticeable and afterwards it is almost impossible to prove that the renter caused this damage.

Additional wear, maintenance and depreciation

The use of the car increases with rental and with it the wear and tear, maintenance and depreciation. If this is not factored into the rental price, the earnings from the rental are minimal, if not nil.

APK

If the car has not passed the MOT test on time, insurance companies can void your car insurance cover in the event of damage (for example, damage caused by malfunctioning brakes or slick tyres).
If, as a renter, you are stopped in a car for which the MOT has expired, the fine will be issued directly to you as driver and you will have to pay it (in the first instance).

Your car will be confiscated!

If the car is imp ounded for any reason (outstanding debt of the hirer, outstanding debt of the lessor, speeding etc.), both parties may have a problem. The hirer cannot continue driving at that moment and the lessor is confronted with this even though the cause may not be his or her fault. In addition, the insurer excludes damage that occurs while the vehicle is impounded.

The following seems unlikely but unfortunately occurs regularly and is a major risk when renting (and sharing or lending) your own car:

• If the hirer of your car has unpaid traffic fines and is stopped by the police, the police may seize your car (in which the hirer is driving at that moment) if the hirer cannot pay the debt immediately. In the worst case scenario, the police may even end up selling the car to collect the outstanding fines with the proceeds.
  This sounds unreasonable because your car is not the property of the tenant. However, according to the Mulder Act, which the police can invoke, this is possible.
• Does the hirer of your car have debts to the tax authorities? Then, in principle, your car could be recovered by the tax authorities on the basis of the Soil Right or Soil Seizure. The tax authorities may then seize all movable property that is on the tax debtor's land but does not belong to him or her.
  In both cases, the lessor thus runs a great risk.

More on this in the following articles:

• Tax tips; Rights of the tax authorities; Land seizure?

Other risks?

Reliable tenant?

Within the rules of the privacy legislation, screening cannot be very intensive.
In fact, it only becomes clear afterwards whether a tenant is reliable or not, but by then it may already be too late. Also, a certain tenant may be reliable at some point, but this does not always have to be the case. You will not find out without rescreening.

Personal Data Protection Act

As a tenant or landlord, please check whether the intermediary you are dealing with is affiliated with the Dutch Data Protection Authority. If this is the case, then you know that this organisation acts in accordance with the Personal Data Protection Act and that the privacy-sensitive details that you need to pass on or upload (such as a driving licence or vehicle registration certificate) are therefore safeguarded.

In what condition will you get your car back?

The hirer may not return the car in the condition in which it was provided.
For example, the car may have been smoked in or the interior may have been dirtied by pets. In that case, the intermediary could impose a fine on the hirer, but if the hirer denies this, it creates unnecessary extra hassle.
If you rent out the car privately, without an agent, this is an extra point of attention.

Discussions and conflicts

Suppose that the car radio or the air conditioning system stopped working after the car was returned to the rental company. The hirer indicates that it has not been used or was not working already and the lessor claims otherwise. This can lead to hefty discussions and conflicts.

The same applies if the rental company discovers or claims that property has been stolen from the car, or if the car is returned without fuel when the arrangements were otherwise.

You will always have to prove your right with evidence, and whether you succeed in this or not, in the meantime, you as a landlord will be stuck with a smelly car or a defective air conditioner.
Alpina wonders if and how the mediator gets involved in such conflicts.

Cancellation of rental request

If you need your car on the agreed rental day, you can cancel the rental request (at the last minute). However, the intermediary can then charge a penalty. The hirer has a problem because he had counted on the car.
If the hirer returns your car (much) too late, while you needed the car, you will be forced to rent a car yourself or use public transport. You can try to recover these costs from the hirer, but it depends on his cooperation or on the intermediary if and how fast you will get these costs back.

What is the response from insurers?

Alpina.nl submitted the (rental) construction to a few insurers for comment.
The insurers say they are wary of this construction because they do not know who is driving the car. Therefore, in case of a claim, the usual processes are used and the lessor of the car will in principle fall back in claim-free years.

If it turns out that the car is used for hire, the insurer will recover the loss from the policyholder, because hire is excluded in the policy. The insurer will not address the insurer of the intermediary, as legally the policyholder is the contracting party. If it is not reported that the car has been used for rental, it is a case of concealment and an entry in the fraud system follows. Any damage or loss will also be registered in the name of the policyholder, which may result in the policyholder not being accepted by insurers in the future.

Reaction Snappcar

Alpina has asked Snappcar for a response to the risks mentioned in this article, but unfortunately Snappcar is unwilling to comment.

Car rental company response

Alpina has also spoken to some car rental companies and they indicate that in the case of more exclusive cars, renting out one's own car can be a good alternative. Regular rental companies usually do not have these in the fleet. Price-wise, it is not always cheaper to rent through an individual than through an intermediary company. Also, when renting through a professional rental company, there is more assurance of a well-maintained car and you will not encounter unexpected surprises.

Consumer Association review

The Dutch Consumers' Association tested Snappcar in May of this year, and found that the idea is sympathetic, but that in practice it does not run smoothly. For example, not every car that appears to be available on the website is actually available in practice. The test, as well as user experiences on the Consumers' Association website and the Snappcar Facebook page, show that the Snappcar website regularly malfunctions, the rental contract is not always received on time and requests are regularly rejected (at the last minute) because the availability is not up-to-date. Furthermore, the Consumers' Association states that you are actually doing business with consumers who can make all sorts of demands and do not always properly update the availability information on the website. As a result, you cannot always count on the rent.
(Source: Consumers' Association)

In the end, what is the conclusion?

Renting out your own car involves an investment of time.
Among other things, the rental company must maintain the availability information on the website, formulate requirements and rules, arrange key exchange, keep track of mileage and fuel levels, note any damage and pay fines and excesses in the event of a traffic violation or damage. The lessor will have to factor these extra costs, as well as the extra maintenance, wear and tear and depreciation as a result of the hire, into the rental price in order to earn something from the hire in addition to the agent's fee.
Also, as clearly described above, renting out your own car is certainly not risk-free, and sometimes even very dangerous. You can therefore ask yourself whether renting out is worth the effort and the risk in relation to the earnings. The same applies to renting from private individuals. Professional rental companies do not always have to be more expensive, and if they are, there are fewer regulation issues and risks.
In short, whether a car is borrowed, shared, rented or leased, everything is fine, provided it is well-considered.