Renting Cars Through an App and How It Impacts Insurance

Most cars stay parked more than they roam the road throughout most of their lifetimes. Seems like a waste. What if, simply by using an app, you could not only get additional use from your car, but also make a little money on the side? Perhaps to help finance the payments or insurance, take a trip or just to save some extra cash? Copying business models similar to those of Uber and Airbnb, peer-to-peer car-sharing services use apps to make this happen for folks across North America and the world.

What do you need to know about any rules, regulations and insurance before trying to turn your extra vehicles into cash cows?

Why Peer-to-Peer Sharing Appeals to Users

Peer-to-peer car-sharing companies such as Turo and Getaround appeal to customers for reasons of convenience, value, variety and location. Peer-to-peer renters can bypass busy airport counters and all of the paperwork processing that can lead to frustration and delays. Prices for renters can be lower substantially lower, too, in part because peer-to-peer companies require much less overhead. Obtaining a vehicle can happen without the two parties ever meeting in person.

Customers using apps to rent cars potentially enjoy other advantages: Peer-to-peer and specialty companies can offer a more distinctive array of vehicles. Want to provide the experience of a lifetime? Rent someone your Ferrari or Rolls! Depending on how much your car is worth, renting it out could net you thousands of dollars a year.

Peer-to-Peer Car Sharing Is Not Widely Regulated – Yet

Only a few states have begun to regulate peer-to-peer car-sharing companies. How to collect sales tax, the use of airport property to store the autos and how to safeguard with auto insurance coverage, as big car-rental companies must do by law, is still developing. But more states every day are moving to protect the interests of consumers and the established rental-car giants. States such as New York, Maryland, and California have moved more quickly to regulate peer-to-peer companies. Illinois has legislation pending, as reported in the Wall Street Journal, that would change the definition of what it means to “rent.” If passed, the effect on consumers could mean higher prices at peer-to-peer companies.

How Are Cars Insured?

Turo offers an extensive protection plan through Liberty Mutual (a trusted SelectQuote carrier) , but hosts can substitute their own commercial insurance if they prefer. Turo’s premium plan covers $1 million in liability. It’s also possible for the renters to use their own insurance.

If something goes wrong — from insurance claims, to accidents and breakdowns, to late returns and missing vehicles — how a host chooses to insure will change how the issues are addressed. And as this model becomes more prevalent, you can expect additional attention on how insurance works with peer-to-peer car sharing. 

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