Think about the last thing you bought. A drill, maybe. Or a fancy dress for a wedding. Honestly, how often do you use it? For most of us, that drill sits idle 99% of the time, and that dress… well, it’s a one-hit wonder.
It’s a wildly inefficient way to live. And it’s exactly the problem the circular economy aims to solve. Instead of the old “take, make, waste” model, we’re moving towards a loop—where products are shared, reused, repaired, and recycled. It’s a shift from owning stuff to accessing services.
But here’s the deal: this new, sharing-focused world comes with new risks. If you’re renting out your car on a peer-to-peer platform, or a company is leasing high-end industrial machinery, who’s on the hook if something breaks? Or gets stolen? That’s where insurance steps in—not as a boring necessity, but as the essential glue that makes the whole circular model stick.
Why Old Insurance Models Just Don’t Fit
Traditional insurance is built for a linear world. You own an asset, you insure it for its replacement value. Simple. But in a circular or sharing economy, things get fuzzy. The risks are dynamic, fragmented, and, frankly, a bit messy.
Let’s say you’re a small business leasing out power tools. Your pain points are huge. Liability shifts between you, the lessee, and maybe even the platform. The asset’s value depreciates differently when it’s used by 50 people instead of one. And filing a claim for a tool damaged by a user you’ve never met? A total nightmare under a standard commercial policy.
This mismatch has been a major roadblock. Without tailored coverage, these innovative business models simply can’t scale with confidence.
The New Wave of Circular & Shared Asset Insurance Products
Innovative insurers are now building products from the ground up for this new reality. They’re moving from static, one-size-fits-all policies to flexible, usage-based coverage. Think of it as insurance that breathes with the asset.
- Embedded & On-Demand Insurance: This is a game-changer. Coverage is baked right into the transaction. Book a car share? Insurance is automatically activated for your rental period. Rent a camera from a peer-to-peer platform? Protection is part of the checkout flow. It’s seamless, user-friendly, and eliminates the coverage gap.
- Pay-as-you-Use/Product-as-a-Service (PaaS) Models: For B2B circular economy plays—like a company leasing robotics or manufacturing equipment—insurance is bundled into the monthly service fee. The insurer covers the asset for the provider, enabling them to offer repair, replacement, and performance guarantees. This de-risks the provider’s offering and makes it more attractive to clients.
- Parametric Triggers for Sustainability: Here’s a clever one. Some policies use real-time data (IoT sensors) to trigger payouts. If a leased solar panel’s energy output drops below a certain threshold due to damage, a claim is automatically initiated. This speeds up recovery and keeps the circular asset productive.
Key Areas Where Insurance is Making a Difference
You can see these new insurance products for the circular economy popping up in some fascinating places.
1. Mobility & Transportation
This is the most visible sector. Car-sharing (Turo, Getaround), ride-hailing, and even e-scooter and e-bike platforms rely on dynamic insurance that covers the asset differently depending on whether it’s owner-driven, rented, or idle. It’s the backbone of the entire user experience.
2. Fashion & Apparel
High-end fashion rental platforms can’t operate without specialist coverage. A stain on a designer gown or a broken clasp on a rented necklace needs a straightforward claims process. Insurance here protects the inventory’s value and enables the “closet in the cloud” model to thrive.
3. Industrial Equipment & B2B Assets
This is where the circular economy gets serious. Companies like Hilti have offered “tool as a service” for years. The insurance piece is critical—it covers theft, damage, and breakdown, allowing the manufacturer to retain ownership, ensure proper maintenance, and ultimately, reclaim and refurbish the equipment. It closes the loop.
| Circular Model | Traditional Insurance Pain Point | Modern Insurance Solution |
| Peer-to-Peer Car Sharing | Personal policy voids during commercial rental; liability confusion. | Embedded, per-trip liability & physical damage coverage. |
| Construction Equipment Rental | Lessee’s policy may be inadequate; lessor’s asset depreciation risk. | Bundled “PaaS” insurance covering total loss, theft, and repair. |
| Consumer Electronics Leasing | Accidental damage not covered; costly disputes over wear & tear. | Included damage waiver with clear terms, enabling easy refurbishment cycles. |
The Tangible Benefits: More Than Just a Safety Net
So why does this matter? It’s not just about mitigating risk. The right insurance product actually enables circular practices.
For businesses, it unlocks new revenue streams. They can confidently offer sharing or leasing models. It also improves asset management—insurers have a vested interest in helping clients maintain and protect the equipment, which extends its lifespan. That’s a core circular goal.
For consumers, it builds trust. Knowing you’re protected when you rent someone else’s property makes you more likely to participate. It reduces the fear factor. And at a macro level, by supporting models that maximize asset utilization, these insurance products indirectly reduce the demand for raw materials and the waste associated with underused goods.
Looking Ahead: The Future is Flexible
The evolution is far from over. We’re heading towards even more granular, data-driven models. Imagine insurance premiums for a shared asset that adjust in real-time based on its condition (tracked via sensors) or the proven reliability of the user. Blockchain could provide immutable records of an asset’s history, repair logs, and insurance claims, making its journey through the circular economy transparent and insurable.
The big challenge, honestly, is keeping up. Regulators and traditional insurance frameworks often move slower than innovation. And there’s a constant need to balance comprehensive coverage with affordability.
But the direction is clear. In a world that’s learning to loop, insurance is shedding its role as a static contract. It’s becoming an active, adaptive participant—a kind of risk-management-as-a-service. It’s the quiet enabler letting us share a drill, lease a laptop, and reimagine ownership, one protected transaction at a time.
