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Why is the Insurance Concept of “Voluntary Parting” a Problem for Equipment Owners in Peer-to-Peer Rentals?

2:15 am | Uncategorized

This Q&A was originally published in the Fall 2019 issue of Documentary magazine, a publication of the International Documentary Association, a nonprofit media arts organization based in Los Angeles.

“Voluntary parting” refers to an exclusion from insurance coverage that can deprive camera and equipment owners of recovery if items are stolen by a larcenous renter.

Independent documentary filmmakers routinely turn to camera rental houses to access state-of-the-art film gear and technical information at affordable prices. Over the years, these vendors have played a critical role in the business of independent film production.

Because high-end cameras are costly and expensive to replace, all rental houses require renters to purchase insurance policies that cover the actual replacement value of all equipment (as opposed to the depreciated value due to wear and tear). The certificate of insurance, which reflects the scope of the policy, typically lists the rental house as a “loss payee” to be compensated by the insurance company for loss or damage to the equipment.

The growth of online camera and equipment rentals, including peer-to-peer platforms, has had a disruptive impact on the traditional camera rental business. Mostly used as a short-term option, online rentals and peer-to-peer transactions are often more convenient and less expensive than renting from traditional outlets. As a practical matter, they allow guerrilla documentary filmmakers to secure top-of-the-line cameras, lenses and equipment on short notice for a late night or weekend shoot, when most rental houses are closed. They also offer substantial savings over retail rental establishments. From the camera owner’s perspective, renting out gear generates income that can offset and subsidize the steep cost of quality equipment. The equipment works for them while the owners are otherwise engaged.

But the online camera-rental business has experienced growing pains. Over the past year, industry blogs discussed regrettable instances of identity theft and rental fraud. In one recent peer-to-peer scenario, an owner agreed to rent his expensive, high-end camera to a filmmaker through a well-regarded online portal that vets active users as part of its service. The renter paid his fee and purchased insurance covering potential damage or theft, as mandated by the platform. The similarly insured owner delivered the camera to the renter, who never returned with the precious equipment.

Things took a sharp turn for the worse for the crestfallen owner when he discovered that the insurance policy he had purchased through the portal did not cover the stolen equipment. The platform denied the owner’s claim, citing a “voluntary parting” exception that applies when equipment is voluntarily delivered to the renter who stole it, and not stolen from the renter. Short-term insurance policies for equipment owners generally exclude losses incurred through a voluntary parting so as not to invite rental fraud. In addition to the insurance waiver, the portal’s Terms of Use agreement contained a clause disclaiming liability for itself caused by a user’s “deceptive or fraudulent acts, voluntary parting of the gear, theft of the gear, or any other loss caused by deceptive or fraudulent acts, notwithstanding its vetting of the renter.”

Frustrated by the voluntary parting coverage loophole and the platform’s stance, the aggrieved owner detailed his experience on a popular photography blog, and a wave of empathetic readers rallied to the owner’s defense. The platform relented and ultimately covered the owner for the loss of his equipment, regardless of the voluntary parting exclusion. As a consequence of this and similar incidents, that rental platform now offers an “owner’s guarantee” protection rider that can be purchased for an additional premium to protect against damage, loss and voluntary parting incidents. The new opt-in waiver protection covers up to $20,000 in equipment losses, according to the company. Not all platforms have addressed the issue.

The loss of valuable camera equipment can be devastating. Before renting one’s precious gear on a peer-to-peer portal or elsewhere, an owner should take precautionary measures to carefully (and independently) vet the potential renter and acquire separate ownership insurance that specifically covers a voluntary parting (in addition to the coverage provided by the platform).

—Steven Beer

© 2016 Steven Beer