Peer-to-peer car-sharing may seem like a great idea. You rent out your vehicle when you’re not using it to make extra money. Turo is eager to take a cut of your vehicle rentals, but is this really a good idea for you or are there hidden risks? Let’s take a look.
Understand Your Personal Auto Insurance Policy
Before you jump in with both feet, you need to understand your insurance coverage. As an insurance agent, Loiselle strongly advises against renting out your vehicle for many reasons which we will discuss in detail later.
If you’re determined to rent your car, talk to your agent FIRST. Personal auto insurance policies often include exclusions that you might not be aware of. The last thing you want is to discover you aren’t covered when you need protection the most.
Car-Sharing Insurance Considerations
Turo offers host insurance packages that make the idea seem safe. However, you must choose an appropriate level of coverage and buy it EVERY time you rent out your vehicle. Unfortunately, the plan that puts the most money in your pocket is also the one with the least insurance coverage and the highest deductible.
As an example, their 90 Plan offers 90% of the trip price, but has a $2,500 deductible. It does not provide a replacement vehicle reimbursement if your car is in the shop for repair, either.
Even if you think this insurance could offer decent trip coverage, what about when your vehicle’s not out as a rental? You still need insurance coverage for a car parked in your driveway and if you want to drive when it is not out on rental. Unfortunately, if you rent out your vehicle without letting your insurer know, you may not have coverage.
Additionally, many lease and financing agreements don’t allow car-sharing. Some states also prohibit subleasing. You could end up in a hot mess, unless you understand the implications.
Potential Insurance Issues If You Rent Out Your Car
Insurance products cover specific risks. If you decide to rent out your car, this creates additional risks that are not covered under your policy.
For instance, renting out your vehicle could be considered “livery.” Livery is the act of moving people or goods for a fee. Most personal policies exclude claims if livery is involved. Commercial auto insurance policies handle this risk.
Your personal policy may not cover other drivers either, or it may require you to add their name to your policy. Otherwise, you’re not covered.
There can also be great confusion about who pays damages if there is a dispute about when the accident happened. Was someone renting your vehicle at the time of the accident, or not? Does the claim go against the car-sharing policy, or your own? What if someone’s seriously injured? Will liability fall on your personal auto insurance or the car-sharing one?
Clearly, insurance companies don’t appreciate taking on additional risks within a policy that isn’t designed for them. Definitely, give us a call before you rent out your vehicle. You’re risking a lot and you may be on the hook for damages and injury if someone renting your vehicle gets into an accident.