Car-sharing service shut down due to auto insurance regulations
RelayRides, a popular car-sharing service, has announced that it will cease operations in New York due to auto insurance concerns. Car-sharing programs are becoming more popular as consumers grow more environmentally conscious and look to save money on transportation costs. These programs are typically used by those commuting to and from work, but New York regulators claim that RelayRides violates the state’s auto insurance laws, which could cause some significant problems for the company itself as well as the insurance companies operating in the state.
Company does not comply with state regulations
According to the state’s Superintendent of Financial Services, Benjamin Lawsky, RelayRides is accused of false advertising and violating the state’s auto insurance laws, putting residents at significant financial risk. State regulators note that the company has been providing insurance coverage through Hudson Insurance Company, which is not approved to sell auto insurance coverage in the state of New York. RelayRides is, therefore, being accused of selling false coverage to consumers.
Companies not considered capable of accounting for risks
Because the auto insurance protection being offered through RelayRides is not approved in the state, those using the car-sharing service could be left at significant financial risk if they fall victim to a car accident. The policies that are meant to protect consumers cannot be officially honored in the state and regulators suggest that neither RelayRides nor Hudson Insurance is capable of accounting for the risks associated with catastrophic accidents.
RelayRides insists that coverage is legitimate
RelayRides has agreed to discontinue its services in New York for the foreseeable future. The company claims that the auto insurance protection it has in place is legal and more than adequate for its business operations in New York. RelayRides is based in California, however, where auto insurance regulations are significantly different from what they are in the state of New York. The New York Department of Financial Services suggests that RelayRides has yet to meet the state’s standards concerning auto insurance.