Peer-to-peer car rental insurance 101

Auto insurance isn’t just something that’s “nice to have” as a car owner. With the exception of New Hampshire and Virginia, states require all licensed drivers to have at least a minimum amount of liability coverage, which helps pay for damages or injuries they cause due to a car accident. Other types of coverage, like personal injury protection, may also be mandated on a per-state basis.

For most car sharing companies — including Avail — a car owner’s personal liability coverage may not extend to periods when your car is being shared on the platform. 

Even though you must have some coverage on vehicles you intend to share via a platform, the platform may also provide owners with additional car sharing insurance protection to ensure you are covered during the sharing period. They may still require you to carry collision (car-involved) and comprehensive (other than collision) coverage on your personal auto policy to cover additional damage.  

Let’s explore how peer-to-peer car sharing insurance works in the context of your existing policy and why your car sharing company needs to offer protection for your vehicle.

Note: If you have questions about what your insurance coverage does and does not cover, please refer to your policy or speak with a licensed insurance agent.

What is peer-to-peer car rental?

Peer-to-peer (P2P) car rental is when a person who owns a vehicle shares it with others through a marketplace or third-party platform and earns money from each booking. P2P car sharing can happen in several ways:

• Drivers can post about their cars’ availability on social media platforms like Facebook.
• Car owners can offer their vehicles on websites like Craigslist.
• Car owners list their vehicles with services or platforms like Avail, Turo or Getaround.

Compare peer-to-peer car sharing with fleet car rental, where a company or person operates a fleet of vehicles to rent out. Most traditional car rental companies use the fleet model.

Why would someone list their vehicle for sharing with a P2P service? It’s an excellent way to make money on a car that isn’t being used, especially if the owner is going on vacation or doesn’t need to drive on days they work from home. Many people do it to help offset the cost of car ownership.

Do you need regular car insurance to rent your car out?

Nearly every peer-to-peer car sharing service requires you to carry full coverage car insurance to rent your vehicle out to other drivers. Even though companies like Avail and Turo need you to have full coverage insurance, your personal policy might not cover your car if you use it for a commercial purpose (like sharing it on Avail). You’ll need to buy additional commercial coverage or list your vehicle on a sharing platform that provides commercial insurance to ensure accidents during the sharing period are covered.

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

Even if you don’t plan on sharing your vehicle through a car sharing platform, it’s vital to understand precisely what is and isn’t covered through your auto insurance policy. This can help avoid confusion when filing a claim after an accident. 

Earlier, we discussed how most car sharing platforms require vehicle owners to have “full coverage” on their cars to use the service. Full coverage auto policies usually include the following types of insurance:

• Bodily injury liability and property damage liability coverage: This protects you if you cause an injury or damage to someone’s property with your vehicle. Most states require all drivers to carry this coverage with specific legal limits, such as $25,000 per person or $50,000 per accident.
• Uninsured/underinsured motorist coverage: If you’re involved in an accident with someone who doesn’t have enough (or any) insurance and it’s their fault, this type of coverage can help pay for damages or injuries after the accident. Many states require insurance carriers to offer this coverage, but drivers can waive it in writing depending on the state.
• Comprehensive coverage: This insurance type covers damage or loss to your vehicle that involves something other than another car. Think fallen trees, animals, storms or theft.
• Collision coverage: This insurance covers damage to your vehicle due to a collision with another car.
• Personal injury protection (PIP): This insurance coverage pays for expenses you might incur due to injuries from an auto accident, regardless of who is at fault. This coverage is required on a state-by-state basis.

Do I need to notify my insurance company when I participate in peer-to-peer car sharing?

You should always understand how your personal auto insurance policy interacts with car sharing platforms. Your insurance company often will not cover your vehicle when used for car sharing purposes. Even though they won’t cover damage, you should still notify the insurance company about your choice to participate.

Some states have regulations preventing insurance companies from canceling or declining renewal for vehicles participating in car sharing. Even with those protections, failure to notify your insurance company may result in complications if you need to file a claim.

Most car sharing platforms require owners to have valid personal insurance that meets specific eligibility requirements. Knowing what kind of coverage you have is vital to fulfilling that eligibility.

While it’s not universally required, notifying your insurance company about your car sharing ambitions can prevent misunderstandings or complications, whether you’re sharing your personal vehicle or one you’ve expressly purchased to share.

How does peer-to-peer car sharing insurance work?

Thankfully, most peer-to-peer car sharing platforms offer insurance protection as part of their services. While this isn’t a substitute for your car insurance policy, it can be a great buffer if something happens to your vehicle while a renter or borrower uses it.

How does peer-to-peer car sharing insurance coverage compare across car sharing platforms?

Each of the major peer-to-peer car sharing platforms offers its own insurance protection and partners with a specific carrier. This helps give car owners peace of mind when leaving their cars with renters.

Insurance coverage and options are structured differently by platform:

• Avail: Avail’s car sharing insurance protection from Allstate is the most straightforward option. Car owners are required to have collision and comprehensive coverage on their personal policy and are responsible for meeting their state’s minimum insurance coverage requirements. Every vehicle left in Avail’s care is eligible for up to $1 million in primary liability coverage. Vehicles are inspected before a user borrows them and after their return. Any noticeable damage leads to a claim filed on the owner’s behalf.

• Turo: Because Turo ties compensation to insurance protection, car owners must choose between five protection plans for their vehicle. All Turo protection plans offer $750,000 in third-party liability coverage from Travelers.
  
  Turo’s plans get more complex when you factor in deductibles for damage repair and reimbursements for wear and tear or loss of hosting income. When you opt for their top-of-the-line protection, you waive 30% of your potential earnings. If you’re willing to forgo maximum coverage, you could earn up to 90% of each trip price not including taxes and fees.
  

• Getaround: Car owners are covered up to a combined limit of $1 million for liability, and the provided comprehensive and collision coverage protects the owner’s vehicle if an accident occurs. Coverage provided by the company is primary to a car owner’s personal auto policy while the vehicle is being shared. Requirements are different if the car owner holds a commercial automobile liability insurance policy.

Do I have to buy commercial insurance to share my car?

In most cases, you won’t have to buy commercial insurance to share your car on a car sharing platform. As noted above, Avail and other services generally include additional coverage. This coverage comes into play while your vehicle is being shared on the platform.

Why is that important? Because most personal car insurance policies won’t cover your car if someone rents or borrows it. Insurance companies have a good reason for this: They can’t accurately assess risk for drivers they don’t have information on.

Make sure you’re covered with peer-to-peer car sharing insurance

Before you place your car on any peer-to-peer car sharing service or list it in a marketplace, make sure you have coverage that meets your state’s and the platform’s requirements. Your car represents a significant investment, and the last thing you want is for passive rental income to drop off because you have to shoulder costly repairs or cannot relist the vehicle.

By listing your vehicle with a reliable car sharing company like Avail instead of placing your car for rent on a website like Craigslist, you’re ensuring your vehicle will have proper coverage while it’s being driven by another person. Should an accident occur, Avail can even facilitate the claims and repairs processes on your behalf to make the experience as easy as possible for you.