The car-sharing service RelayRides has agreed to stop operating in New York, after state authorities said the company was violating state insurance laws.
RelayRides, based in San Francisco, helps car owners rent out their vehicles to others, for a fee.
Benjamin M. Lawsky, New York’s superintendent of financial services, said in a statement that the Financial Services Department had ordered the firm to “cease and desist” what it called “repeated false advertising and violations of insurance law, which are putting the public at risk.”
In addition, the department issued a consumer alert, warning New Yorkers that insurance offered by RelayRides through Hudson Insurance Company was “not approved by the state” and could leave consumers personally responsible for an accident.
“RelayRides sold New Yorkers a false bill of goods,” Mr. Lawsky said in a prepared statement. “Despite RelayRides’ assurances to the contrary, their New York customers could get left holding the bag financially for an accident because the company’s insurance is illegal and inadequate.”
The company has agreed to stop conducting business in New York “until further notice,” the statement said.
RelayRides’ chief executive, Andre Haddad, said in a statement: “Innovation, by its nature, does not always fit within existing structures. Although we’ve been careful to ensure the protections offered to our member community comply with legal frameworks around the country, we learned in conversations with the New York Department of Financial Services that it believes there is noncompliance with certain unique aspects of New York insurance law.”
“We are actively working with the department to address these concerns,” Mr. Haddad said. “While we’re cooperating with the department on these changes, we will be suspending activities that it considers noncompliant.”
He added that “all existing reservations in New York will be honored.”
Hudson Insurance Company did not immediately respond to a request for comment.
The state finance department said that as part of its “widening” investigation of RelayRides, it had demanded additional information from the company and from Hudson Insurance “to help determine the full extent of the violations and any penalties” that the department may impose.
Mr. Lawsky’s statement said that RelayRides told New Yorkers that they would not be liable for out-of-pocket expenses in the event that their car was stolen or involved in an accident. But, he said, the department’s investigation had determined that those claims were not true, and that New Yorkers could be held personally liable for property damage, theft, bodily injury or death that occurred during the rental.
Have you rented from RelayRides, or rented out your car using the service? What was your experience?
Article source: http://bucks.blogs.nytimes.com/2013/05/15/car-sharing-service-to-stop-operating-in-new-york/?partner=rss&emc=rss
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