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 car companies. It provides many benefits, including lower prices and a greater variety of vehicle choices.
Learn how it works, who offers these services, and whether insurance exists for peer-to-peer car rentals.
- Make sure you have sufficient auto insurance when using peer-to-peer car sharing.
- Your personal car insurance does not cover peer-to-peer car sharing.
- Some car-sharing companies provide basic insurance plans with very low limits, so it’s worth spending more to get top-tier plans that increase coverage.
- Renters will be charged a deductible, typically from $1,000 to $3,000.ake sure you have sufficient auto insurance when using peer-to-peer car sharing.
What is a peer-to-peer car rental?
Peer-to-peer car rental services temporarily let individuals or organizations rent cars from individual vehicle owners. 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, a vehicle price list and 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.
If someone wants to rent their car, the owner is notified. If the owner approves the request, the renter pays via 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 determine who should cover the associated costs.
There 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 because terms vary. However, many car insurance companies exclude you from being covered while driving a P2P vehicle.
For example, your policy might exclude all third-party rentals from coverage. It may also 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.
Does my insurance cover the car if I rent out my car through a car-sharing program?
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 leading 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 doesn’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 be 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 and they are listed below.
- 60 plan- Get premium protection with 60% trip earnings, up to $750,000 in third-party liability coverage, and no deductible for eligible damage costs. Enjoy additional benefits like wear and tear reimbursement and compensation for lost hosting income or a replacement vehicle.
- 75 plan- It offers solid coverage with 75% trip earnings, up to $750,000 in liability coverage, and a $250 deductible for eligible damage costs. Includes $30/day for a replacement vehicle during repairs but excludes wear and tear and income loss reimbursement.
- 80 plan- Earn more with 80% of the trip price and up to $750,000 in liability coverage, with a $750 deductible for eligible damage costs. This plan excludes replacement vehicles, wear and tear, and income loss reimbursements.
- 85 plan- Maximize your earnings with 85% of the trip price and up to $750,000 in liability coverage, with a $1,625 deductible for eligible damage. This plan excludes reimbursement for wear and tear, income loss, and a replacement vehicle.
- 90 plan- Earn 90% of the trip price with up to $750,000 in liability coverage and a $2,500 deductible on eligible damage costs. It excludes replacement vehicles, wear and tear, and income loss reimbursements.
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 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, theft, and 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.
Before renting out your vehicle, thoroughly understand how well you are covered. Talking to your insurance agent can help you determine if you need to purchase additional coverage to be 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 must purchase physical damage coverage (comprehensive and collision) from the ride-sharing company to cover your car. 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.
In conversation with an expert
CarInsurance.com editors interviewed James Brau, Joel C. Peterson, professor of finance at Brigham Young University. See his responses below.
What insurance challenges do peer-to-peer rentals face compared to traditional rentals?
Peer-to-peer rentals often face insurance challenges because individual owners usually don’t have the same commercial policies that cover traditional rental companies. This can lead to gaps in coverage, making it tricky to handle claims if something goes wrong during a rental.
What key factors should car owners consider when selecting insurance for peer-to-peer rentals?
Car owners should look at whether the insurance policy covers both damage and liability specifically for rentals, as not all personal policies do. They’ll also want to check for any exclusions or limitations, like where or how the car can be used, to avoid surprises if they need to file a claim.
Traditional car rentals vs. peer-to-peer car sharing
When it comes to renting a car, two primary options are available: traditional car rental companies and peer-to-peer (P2P) car-sharing platforms. Each option has its own pros and cons, so understanding the differences can help you choose the best fit for your needs, budget and travel plans.
Traditional car rental
Traditional car rental companies have been the go-to for car rentals for decades. These rental agencies maintain large fleets of vehicles, offering a wide selection of options from compact cars to luxury SUVs. They are typically available in most major cities and tourist destinations, making them easy to find when traveling.
Traditional car rental companies typically offer insurance options that cover liability. However, during peak travel periods, these rentals can sell out quickly and prices often surge, making them expensive.
Peer-to-peer car sharing
Peer-to-peer (P2P) car sharing, offered by companies like Turo and Getaround, is an alternative way to rent a car. With P2P car sharing, individuals rent out their personal vehicles to others via an app or platform. Unlike traditional rentals, peer-to-peer car sharing allows you to find unique vehicles, from electric cars to vintage models, giving you a more comprehensive range of options. If you’re looking for a specific type of car, P2P rentals might be the best choice.
Since these rentals are from individuals, you may find cars in neighborhoods or at more convenient pickup spots, often without visiting a rental office. This flexibility can be ideal for those needing quick or last-minute rentals.
P2P car sharing often provides competitive pricing, especially for short-term rentals or trips of a few hours. Many owners are willing to rent their cars at lower rates than traditional agencies, making this a cost-effective solution.
Which one should you choose?
Both traditional rentals and peer-to-peer sharing platforms serve different purposes, so assess your trip length, budget, and preferred level of convenience to make the right choice. Whether you use a well-known rental brand or an app-based car-sharing platform, both options allow you to hit the road on your terms.
Read more: A quick guide to rental car insurance coverage
Best practices for car owners if you rent out your car on a peer-to-peer service
Renting out your car through a peer-to-peer (P2P) service can be a great way to earn extra income. However, it also comes with responsibilities and risks that require careful management.
- Understand the platform’s policies: Read the terms and conditions and familiarize yourself with the platform’s rules, fees and policies. Find out what the platform’s insurance covers and consider additional coverage if necessary.
- Regular maintenance: Stay up-to-date with servicing and promptly address any repairs to ensure your car remains safe and reliable for renters.
- Create an accurate and appealing listing: Use clear images of your car to highlight features and amenities, and research similar listings to set an appropriate price.
- Document vehicle condition: Check and record the car’s condition before each rental. Take photos of the interior and exterior to document any existing damage.
- Communicate clearly with renters: Reply quickly to inquiries and booking requests and offer clear guidance on pickup/drop-off procedures and car operation.
- Prepare for emergencies: Ensure renters have access to 24/7 assistance. Keep essentials like a spare tire and first-aid supplies in the car.
Final thoughts on peer-to-peer car rental insurance
Traditional car insurance policies may not cover damages or liability when renting a vehicle on a peer-to-peer platform. To bridge this gap, most platforms offer their own insurance packages, which vary in coverage limits, deductibles and liability protection. Carefully evaluate the coverage offered and ensure it aligns with your renter or owner needs.
FAQs: Peer-to-peer car rental insurance
What kind of insurance do I need to rent out my car?
Peer-to-peer car-sharing platforms offer protection plans and liability coverage. Still, you’ll also need to keep your own personal car insurance that fulfills the minimum coverage requirement of your state.
These requirements may be waived if you choose to use commercial insurance instead of car-sharing insurance, which could be a more suitable option if you’re renting out several vehicles.
What should I do if I have an accident while using a peer-to-peer rental?
If you have an accident while using a peer-to-peer rental vehicle, prioritize safety by checking for injuries and calling emergency services if necessary. Move to a safe location and document the scene by taking photos and gathering information from all parties involved. Notify the rental platform and, if required, file a police report. Contact your personal auto insurance provider to inform them of the accident and review your rental agreement for coverage details. Keep a record of all communications related to the incident to ensure an easy claims process.
How do I verify if a vehicle is adequately insured before renting?
Review the platform’s insurance policies to understand the coverage provided, including liability and physical damage protection, to verify if a vehicle is adequately insured before renting through peer-to-peer car sharing.
Check if your personal auto insurance offers rental coverage and consider purchasing additional insurance if needed. Communicate with the vehicle owner to confirm the vehicle’s insurance status and document the car’s condition before use.
Ask the Insurance Expert
Laura Longero
Executive Editor
Laura Longero is an insurance expert and Executive Editor at CarInsurance.com, where she specializes in helping consumers navigate the complexities of the financial and insurance industries. She has 15 years of experience educating people about finance and car insurance. Prior to joining CarInsurance.com, she worked as a reporter and editor at the USA Today Network. Her expertise provides readers with practical guidance, helping them make informed choices about their financial and insurance needs.
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Leslie Kasperowicz
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Leslie Kasperowicz is an insurance educator and content creation professional with nearly two decades of experience first directly in the insurance industry at Farmers Insurance and then as a writer, researcher, and educator for insurance shoppers writing for sites like ExpertInsuranceReviews.com and InsuranceHotline.com and managing content, now at CarInsurance.com.
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