Insurance Journal Forums

I recently posted a help question with no luck.... viewtopic.php?f=1&t=7694


My question is:

What are the rules behind my startup providing our own insurance policy in order to insure our users' musical gear when they rent to eachother.

We charge a small flat fee per transaction, and an optional insurance policy... (for ex: $5/rental/week + $8 insurance per rental per week)

We are located in California, but could get users nationally and internationally.

Do we need some sort of license if we are just insuring gear damage up to (for example) $1,000 (no injury liability/theft, etc)

856 Views on the first posting and no replies obviously means there is no hope. Re-posting doesn't help.

Most of us see way too much work for the potential income.

If the exposure is damage to a $1,000 musical instrument, self-insure. Most preferred insurance agencies recommend a deductible of at least $1,000 on a standard property based policy. With this type of exposure (we can't underwrite everyone), I would start with a $5,000 deductible.

If you've talked to a dozen insurance companies and no one is interested . . . .

This would be a logistical nightmare for an insurance carrier and agent. Based on the odds that your company fails it's not worth it for us to spin our wheels. I don't want to be negative about your business, I hope you are very successful. I'm just being realistic from the agents point of view. From what I've seen, these things don't usually work.

Good luck!

My feeling is that if you are assuming the risk yourself and making a charge for that and calling it an "insurance" charge you will need to be licensed with the State Department of insurance (Probably as an insurance company, and that is a bar that is too high for a small startup) The other poster is correct that no existing insurance company is going to want to get involved.

To avoid the insurance thing, maybe you are acting as a bailee and could offer a bailment contract like those little things parking garages used to hand out as claim tickets which would reimburse the bailor for an amount up to $1,000? Just thinking out loud - you would need to talk to an attorney. You might already be in a position where you are reponsible whether you charge for it or not

I wouldn't lose hope just yet. If RelayRides can find an insurance solution for peer to peer car rentals, there may be an opportunity to find something for your venture. http://support.relayrides.com/entries/2 ... e-coverage

I'm in the insurance business but this is outside my area of expertise, and the risk appetite for my company. If I was in your situation I'd look to some of the more established peer to peer businesses to see how they tackled the issue.

I'm in the market for a solid body electric guitar. I think a rental would be a nice way to test-drive a few before making a purchase. I've seen a few chain stores (GC) open some rental operations, but not many.

Best of luck

Steve in Texas