Third party insurance premiums are a major problem for private car rentals

In a season of unsettling COE prices and stringent bank loan rules, car sharing is seen as an alternative option to car ownership - yet insuring your car during the rental period seems to be the hindering factor. The Straits Times reported none of the major insurance companies - like NTUC Income or Chartis - offer private-rental coverage.

Derek Teo, General Insurance Association President, explained that without proper insurance coverage car renters could incur high costs if an accident occurs, especially when a third party is seriously injured. He added a typical motor insurance policy does not cover rentals, and it is the responsibility of individuals to contact their respective insurers to check if they offer coverage for private leasing arrangements.

Interestingly, Peh Chee Keong, Vice-President and Head of Motor Insurance from NTUC Income remarked there isn't enough demand to justify short-term insurance plans. Alternatively another Senior Executive within the same industry claimed insurers are reluctant to cover individual car rentals due to the high risks involved. He explained how unlike big industry players like Hertz, a part time renting individual lacks the resources and tools to screen out high risk drivers.

Transport Minister Lui Tuck Yew announced in Parliament last month that the Land Transport Authority is studying ways to loosen up the current private car rental scheme which was introduced back in 1996, in a bid to make car sharing more accessible. Under the current rules, owners are allowed to rent their cars over a weekend, from Friday, 7:00pm to Monday 7:00am, as well as on public holidays - provided their vehicle has adequate insurance.

A current alternative is to sign up with iCarsclub - a new local startup which has teamed up with online insurance company DirectAsia.com with the insurance premium being paid by the car's hirer. iCarsclub co-founder, 25-year old Jamie Wang, acknowledged none of the other insurers were willing to offer insurance for private rentals.

Members of iCarsclub undergo two stringent screening processes including once by DirectAsia.com. The minimum age requirement for a hirer is 25, with a driver's license that is valid for at least two years, with no more than six demerit points incurred.