Peer-to-peer car-sharing and insurance: How it works
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Peer-to-peer car rental (Turo, Getaround): A guide to insurance coverage


How does insurance worksfor Turo and Getaround?

Key takeaways:

  • You need to buy the car-sharing company’s auto insurance to be sufficiently covered
  • 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

Peer-to-peer car sharing, which is basically AirBnB for cars, allows you to rent another person’s vehicle, typically when the owner wouldn’t be using the car much, or on the other hand, to rent out your car when you don’t need it.

For example, if you parked your car at the airport for a week while away on a trip, you could rent it to someone while you’re gone. Or, let’s say you don’t need to drive much, so you don’t own a car. You could occasionally rent for a few hours another driver’s car that’s sitting in the person’s driveway most of the day because he or she works from a home office.

While the business model is simple, the fledgling industry is not without complications, primarily on the insurance and regulations fronts. Chief among the insurance issues is that some car-sharing networks’ fine print says your personal auto policy would be the primary source for paying claims, even though most personal policies typically exclude renting or driving car-sharing vehicles from coverage.

Here Penny Gusner, consumer analyst for CarInsurance.com, answers the most common questions about peer-to-peer car sharing, also called P2P car rental, car-sharing 2.0 and on-demand car rental.

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

Turo and Getaround are among the most notable, while iconic car makers, such as General Motors, are also jumping in to the game. 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 available for typically short-term rental.

GM in July rolled out Peer Cars, allowing GM owners in a few cities to list their personal vehicles  for rent through the automaker’s car-sharing platform, Maven. Chevrolet, Buick, GMC and Cadillac owners in Chicago, Detroit and Ann Arbor can put their cars and trucks, model 2015 or newer, up for rent when they aren’t using them. The service is an expansion of GM’s car-sharing platform, Maven, which rents out GM-owned cars. GM plans to expand Peer Cars service to other cities over the rest of the year.

Peer-to-peer car sharing makes efficient use of idle vehicles and may be cheaper and easier to rent than traditional car rentals, but like ride-sharing services such as Uber and Lyft, it’s somewhat controversial. The car rental lobby and trade groups have been working to introduce legislation that would regulate peer-to-peer car sharing providers the same way car rental companies are, contending that bypassing industry rules gives car-sharing networks an unfair business advantage. But, just as Uber and Lyft argue that they are software companies, not taxi services, Turo and other car-sharing networks say that they don’t own a fleet of rental cars so should not be deemed a car rental business, and that they are technology company providing a software platform to allow car owners to earn extra money.

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 greatly, but many car insurance companies have put language in that excludes coverage if you’re using a P2P vehicle, says Gusner. “It may simply say all third-party rentals are excluded. My own policy states that it doesn’t provide coverage for ‘any motor vehicle that is operated, maintained or used as part of a personal vehicle shared program.’ It goes on to say personal sharing programs and ride-sharing activities of any kind are excluded under my liability, medical payments, physical damage coverages and uninsured motorist coverage,” she says. It’s an important distinction to be aware of because traditional car rentals are generally covered under a personal policy.

A lot of auto insurers have included this type of language in policies over the last several years. If you can’t determine if there is coverage, Gusner recommend you contact your insurer for clarification.  This is especially important to know before renting as some car-sharing networks operate under the assumption that a renter’s policy would pay some of the costs involved should the renter damage the car they booked.

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

Not, normally unless you have a commercial instead of personal auto insurance policy.  Personal policies are now being written to specifically exclude peer car-sharing networks

Are more insurance companies offering riders (much like they now do for ride-sharing, like Uber or Lyft) to accommodate peer-to-peer car sharing?

“No, I am not seeing offerings for P2P car-sharing programs as I am for ridesharing drivers. It is an area where we may see some growth soon, though, since auto insurers have expanded their offerings with specific ridesharing coverage or endorsements because they found a market for once Uber and Lyft took off,” says Gusner.  “Or, insurance companies may just tell those renting out their vehicles to get a standard commercial policy. For the driver, there really doesn’t seem to be an option out there if your personal policy doesn’t cover the ‘rental’ other than buying coverage from the company running the P2P program, such as Turo.”

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

Liability car insurance covers damage you do to another car and pays medical costs for those injured in an accident you cause. But liability does not cover the vehicle you’re driving, or pay for your own injuries. Collision coverage pays for damage to the car you’re driving regardless of fault, while comprehensive covers vandalism and theft, as well as damage due to hail, flooding and fire.

“As for physical damage coverage (collision and comprehensive) from the companies running the P2P programs, it is my understanding regarding Turo that you only get collision and comp coverage if you pay for premium or basic host or guest insurance protection packages,” says Gusner.

“For Getaround, it appears there is a policy that is a combined single limit, meaning that liability and physical damage coverage are all wrapped into that one limit of $1 million,” she says. “So, all claims go against that one maximum limit amount.”

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

“To be completely covered properly, I’d recommend talking to your car insurance company at the onset of participating in a P2P car-sharing program.  Your insurer will tell you what, if anything, your personal policy covers and if you need to upgrade to a commercial policy. It is better to be proactive so you don’t get yourself into a financial bind by not having the coverage you need,” says Gusner.

What risks should owners who participate in P2P car-sharing be aware of?

“The risks of course include your car being damaged and putting more mileage on your vehicle, both of which can increase insurance rates. Also, if you don’t notify your insurer that you’re renting out your car, you are at risk of having your policy canceled, which then can make it difficult to find a company that will insure you at all,” says Gusner.

Perhaps more importantly, if you don’t have a commercial policy and your personal policy doesn’t cover participating in P2P sharing, then you need to purchase physical damage coverage (comprehensive and collision) from the ride-sharing company to have your car covered, says Gusner. “Even with that, if you buy a basic plan with Turo, you will still have to pay out a $3,000 deductible. The guest may technically be financially responsible, if he or she did obtain guest coverage, but you’d have to spend your time and effort going after payment.” Turo’s website does state that it will take the lead on any claims processing for you, but chances are you will be involved on some level.

Another risk is that if you go with a basic plan from Turo, you’re only covered for state minimum liability amounts, which are very low, and can easily be exceeded even in a minor accident.

What about P2P car-sharing risks for renters? 

“The risk is that they don’t have insurance that follows them to this car so unless they purchase the guest insurance, they could be held personally financially responsible if they wreck the car,” says Gusner.

Also, Getaround stipulates that renters essentially pay a deductible, or “Getaround fee,” of $1,000 if the car they are driving is damaged in any way, regardless of fault. “So even with coverage in place, if you ding a car as a renter, it’s going to cost you a thousand bucks,” says Gusner.

Turo is a bit more complicated. Apparently some small traditional rental agencies use Turo to expand business, and have commercial coverage in place, so renters who book from them may decline Turo coverage as the commercial policy would kick in. Renters who get their cars from individuals can choose from a “Basic” plan that has a $500 to $3,000 deductible or a “Premium” plan that has a $500 deductible.

After filing a claim, depending on which coverage plan you selected, you initially pay a fee of $500 to $3,000 depending on the initial damage assessment, which may or may not be refunded, depending on the situation. You’ll also pay a claims handling fee of up to $575. So, you will have to put out $1,075 to $3,575 to file a claim. And then wait to be reimbursed, which will depend on the amount of damage, who is at fault and other criteria--you could receive a partial refund, a full refund or get nothing.

Turo insurance at a glance

Premium costs 40 percent of rental price; Basic is 15 to 25 percent; Decline is no cost

Car owner

  • Booking Period (the period shown in the trip confirmation)

Primary liability coverage up to $1,000,000; protection for physical damage to your car is provided without deductible for the Premium and Standard host protection plans, and with a $3,000 deductible for the Basic plan.

Under the Premium and Standard plans, owners receive the actual cash value of their car (up to $125,000) if it’s totaled.

No coverage is available for hosts who are not utilizing a Turo protection plan.

  • Delivery Period (when the host or designee, who is a “Turo Approved Driver,” is actively delivering the car to the guest, and not while retrieving the car from the guest).

Primary liability coverage up to $1,000,000; no protection for physical damage to your car.

No coverage is available for hosts who are not utilizing a Turo protection plan.

Renter

  • Premium Plan

Liability coverage up to $1,000,000.

Physical damage to the car covered up to the actual cash value of the car.

Coverage is secondary to any other insurance you may already have, but typically your own insurance will exclude coverage for car-sharing services so don’t count on this kicking in.

There is no deductible for the supplemental liability coverage.

For the physical damage protection, once you’ve exhausted your own insurance for physical damage, your out-of-pocket expense is limited to $500.

There is no coverage in any guest plan -- you are fully financially responsible-- for mechanical or interior damage.

  • Basic Plan

Liability coverage up to the minimum required by the state where the car is registered.

Physical damage deductible is $3000.

  • Decline Coverage

Same liability coverage as in the Basic Plan, but no protection at all for physical damage: guest is liable for all costs related to physical damage to the vehicle.

If you have rented a vehicle where the host is not utilizing a Turo protection plan and has chosen to provide its own commercial rental insurance directly to you, iinquire with the host to understand the coverage limits, exclusions, and applicable costs, if any.

 

 

Getaround insurance at a glance

Coverage applies for the duration of each rental, from start to finish, and includes liability, collision and comprehensive.

Car owners

  • Liability

Car owners are covered up to a combined single limit of $1,000,000 for liability. Coverage includes personal liability for the renter, third-party liability for passengers and other affected parties, and third-party property damage arising from a car accident.

  •  Comprehensive and collision

The collision coverage provided protects the owner's vehicle in the event of an accident.

Comprehensive covers for theft, fire, vandalism and weather damage.

Coverage pays out up to the actual cash value of the car.

Renters

  • Liability

Renters are covered up to the liability limits carried by the vehicle owner or with a combined single limit of three times the state minimum, whichever is greater.


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