Renting a car can be expensive. So, if you’re looking for an affordable way to get around town, peer-to-peer car rental may be just what you need.

Peer-to-peer car sharing is renting vehicles from other people rather than traditional car rental companies. It provides many benefits, including lower prices and a greater variety of vehicle choices.

Let’s discuss how it works, who offers these services and whether or not insurance exists for peer-to-peer car rentals.

Key Highlights
  • Make sure you have sufficient auto insurance when using peer-to-peer car sharing.
  • Your personal car insurance covers traditional rentals but does not cover peer-to-peer car sharing.
  • Basic insurance plans provided by some car-sharing companies have very low limits, so it’s worth spending more to get top-tier plans to increase coverage.
  • Renters will be charged a deductible, typically from $1,000 to $3,000 if they need to file a claim. 

What is a peer-to-peer car rental?

Peer-to-peer car rental services let individuals or organizations rent cars from individual vehicle owners for a short period. This can be a cheaper, more convenient way to rent a car than a traditional car rental agency.

For a car owner, peer-to-peer car sharing offers the opportunity to make money by renting the vehicle to other drivers when the owner is not using the car.

How peer-to-peer car rental works

Each peer-to-peer car rental service has its own rules, but there are some general guidelines that every rental company typically follows.

Someone who owns a car lists it on a platform. The owner provides pictures and a price for the vehicle, as well as other information about the car.

Anyone who needs a car browses the company’s website to find all the available options. From there, it’s as simple as choosing the car that best meets the renter’s needs. The renter mentions how long they need the vehicle and submits a booking request.

The owner is notified if someone wants to rent their car. If the owner approves the request, the renter pays via a credit card and picks up the vehicle at the agreed-upon time.

After using the car, the renter returns it to the owner. If the renter damages the vehicle, the owner and the rental company will figure out who should cover the associated costs.

The are many benefits of peer-to-peer car sharing, including more affordable pricing and a greater selection of cars.  

If I rent a car through a P2P car-sharing service, am I covered under my own insurance?

You will have to check your own policy, as terms vary. However, many car insurance companies exclude you from being covered while driving a P2P vehicle.

For example, your policy might state that all third-party rentals are excluded from coverage. Or it may explicitly state that it does not cover any vehicle operated, maintained or used as part of a personal vehicle shared program.

It is crucial to understand exactly what your policy will – and will not – cover if you use a peer-to-peer rental service. If you look at your policy and cannot determine whether you have coverage, contact your insurer for clarification.

If I rent out my car through a P2P car-sharing program, does my insurance cover the car?

In most cases, a personal car insurance policy will not cover your vehicle when it is being rented as part of a peer-to-peer car-sharing program. To get such coverage, you must purchase a commercial auto insurance policy.

Many personal policies are now being written to exclude peer-to-peer car-sharing from coverage.

Who are the main players in peer-to-peer car sharing?

Turo and Getaround are among the most notable companies offering peer-to-peer car sharing.

Avis-owned Zipcar has been around longer than Turo and Getaround, but differs significantly in that it is not peer-to-peer — it is owned by Avis, which has a fleet of vehicles garaged in residential areas that typically are available for short-term rental.

How does insurance work for Turo and Getaround?

Peer-to-peer car sharing allows you to rent another person’s vehicle, typically when the owner wouldn’t use the car much.

Or perhaps you are a car owner who would like to rent your vehicle to others. For example, instead of parking your car at the airport for a week while away on a trip, you can rent it to someone while you’re gone.

While the business model is simple, the industry is not without complications. For example, car sharing raises some important questions about insurance. Some car-sharing networks’ fine print states that your personal auto policy will serve as the primary source for paying claims.

This is risky for the car owner because most personal policies typically exclude vehicles from coverage when used for rental or car-sharing purposes.

Turo insurance at a glance

According to Turo, “all host protection plans in the United States come standard with $750,000* in third-party liability insurance issued to Turo under a policy from Travelers, as well as varying levels of contractual reimbursement from Turo for physical damage and theft — the level of protection varies with the plan you choose.” There are five plans available.

Getaround insurance at a glance

According to Getaround, “hosts are covered up to a combined single limit of $1,000,000 for liability, except where required otherwise by applicable law. Coverage includes personal liability for the guest, third-party liability for passengers and other affected parties, and third-party property damage arising from a car accident.

How do liability, comprehensive and collision work under company insurance plans?

Liability car insurance covers damage you cause to another car and pays medical costs for those injured in an accident where you are at fault. But liability does not cover the vehicle you’re driving, or pay for your own injuries. 

Instead, collision coverage pays for damage to the car you’re driving, while comprehensive covers vandalism and theft, as well as damage due to hail, flooding and fire.

Some car-sharing services may offer collision and comprehensive coverage, but you may have to pay for this upgraded coverage. Others may offer coverage that might not be adequate to protect your finances.

Make sure you thoroughly understand how well you are covered before renting out your vehicle. Talking to your insurance agent can help you determine if you need to purchase additional coverage to make sure you are fully protected.

Should I get commercial insurance if I participate in P2P car-sharing services?

Anyone considering participating in a P2P car-sharing program should talk to their car insurance company first to determine how much coverage they have and whether they need to purchase additional insurance.

Participating in car-sharing programs without being fully covered puts you at tremendous financial risk should you become involved in an accident, or should you rent out your car to a driver who gets into a crash.

What are the risks of peer-to-peer car sharing for hosts (owners)?

One obvious risk of participating in car sharing is that your car could be damaged. In addition, you will be putting many more miles on your car each year, which also can increase your insurance rates.

Failing to notify your insurer that you’re renting out your car puts you at risk of having your policy canceled. It may then become difficult to find a company that will insure you.

If you don’t have a commercial policy and your personal policy doesn’t cover participating in P2P sharing, you need to purchase physical damage coverage (comprehensive and collision) from the ride-sharing company to have your car covered. This coverage may come with limitations or high deductibles.

Finally, you must have adequate liability coverage. Car-sharing companies may offer liability coverage limits that are too low to ensure you are financially covered if someone driving your car damages another driver’s car or hurts or kills someone in an accident.

What are the P2P car-sharing risks for renters (guests)? 

Before you use P2P car sharing, ensure your personal auto insurance policy or some other type of insurance fully covers you. Otherwise, you could “be held partially or fully personally financially responsible if you wreck the car or damage someone else’s car or injure them.

Also, make sure you understand the car-sharing company’s rules. Some car-sharing services might require you to pay a deductible if the car you are driving is damaged in any way, regardless of fault.

— Michelle Megna contributed to this story.