ZipCar expands Insurance Coverage

Zipcar and Flexcar have agreed to merge. This is exactly the sort of merger that I think ought to be prohibited by antitrust laws: two competitors doing exactly the same thing, even if they are both still Tiddlywink operations by Fortune 500 standards. I’d much rather see them compete in the marketplace than collude. However there will be at least one immediate benefit for ZipCar customers: more insurance.

Effective immediately, Zipcar is raising their coverage to $300,000 per incident for members 21 and over instead of the state mandated minimum. It will also soon be possible to rent Zipcars in Flexcar’s cities: Philadelphia, Seattle, Portland and Atlanta. Now if they could only find the cars they think they have in Brooklyn, everything would be hunky dory.

5 Responses to “ZipCar expands Insurance Coverage”

  1. John Cowan Says:

    It depends on what you think the relevant market is. I’d bet Flex and Zip don’t think they can make it against Hertzavisnationaldollar unless they have a bit more flexibility and a bit more clout.

  2. Elliotte Rusty Harold Says:

    Zipcar is really totally different than a traditional rental car company. Hertz/Avis/National/Dollar are designed for medium term (days-to-weeks) rentals when you’re out of town. Zipcar/Flexcar are designed for short term (hourly) rentals in your hometown. Zipcar replaces automobile ownership. It doesn’t supplement it. Unless Hertz/Avis/National/Dollar completely change their business model, they’re little to no threat to Zipcar. Even if they do, it will probably by a repeat of the Blockbuster/Netflix mismatch.

  3. François Says:

    At least in San Francisco, the war is between them and City Car Share which was the pioneer, and is a local non-profit. CCS basically invented the concept; it existed in Zürich and a few other places before, but slightly different, and much smaller scale: you could only take the car(s) in your neighborhood, for which you were registered. CCS understood that the web was solving the scale problem.

    Zip+Flex probably think that by merging, they will have more car, and (network effect…) they will be more attractive, and effectively kill City Car Share. I’ll let you guess which one I think are the bad guys, and which one is the good guy :).

  4. Elliotte Rusty Harold Says:

    I’m in New York so I have no experience with City Car Share, and perhaps it’s the better option for those in San Francisco. However I’m having a hard time seeing why hourly car rental is a plausible activity for a non-profit. I’d much rather have 10 for-profit competitors than 1 or 2 non-profits.

    Non-profits make sense in perhaps three cases:

    1. There’s no business case to generate profit. (e.g. Amnesty International)
    2. The people being served have little or no income with which to purchase the services offered. (Medicins sans Frontieres)
    3. Making a profit would cause a conflict of interest with offering the right service (Hospitals)

    None of those seem to apply to car rental. There’s a clear business case. The people being served can afford the service, Finally, if there is effective competition in the market, then businesses have to provide good service or watch their customers go elsewhere. Of course if businesses can collude and merge rather than compete to offer good service, then the non-profit may be the preferred solution. However, overall I’d rather see competing for-profits in this space than non-profit motivated charities.

  5. Kevin Klinemeier Says:

    The fact that the big car rental companies don’t currently provide hourly car rental doesn’t preclude Zip and Flex from being worried about it and planning for it in advance.

    Additionally, Zip and Flex already compete with them from the user experience of “I go to a city I don’t live in, and I rent a car to get around.” With Hertz et al, it’s a daily rental. With car sharing companies it’s hourly. This is a small part of the experience, but it’s competition nonetheless.

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