Peer-to-peer car rental services: How protected are you?

What insurance looks like with Turo and Getaround

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Susan Meyer

Senior Editorial Manager

  • Licensed Insurance Agent — Property and Casualty

Susan is a licensed insurance agent and has worked as a writer and editor for over 10 years across a number of industries. She has worked at The Zebr…

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Ross Martin

Insurance Writer

  • 4+ years in the Insurance Industry

Ross joined The Zebra as a writer and researcher in 2019. He specializes in writing insurance content to help shoppers make informed decisions.

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In recent years, the sharing economy has witnessed a surge in innovative services that provide individuals with convenient access to various resources. 

Got a spare room? Rent it out! Got a pool you aren’t using all the time? There are people with money just waiting to swim in it. You can even rent out your yard for puppy play dates. So it seems logical that cars are a logical addition to the peer-to-peer sharing economy.

In fact, apps like Turo and Getaround have made peer-to-peer car sharing a multi-million dollar industry (projected to be valued at $7.2 million by 2030)[1]. These platforms connect car owners with individuals in need of temporary transportation, offering a cost-effective and flexible alternative to traditional car rental agencies. 

But how safe are these services? What protections should you make sure you have as a car owner before renting your vehicle? And, as a renter, what happens when you get in an accident? In this article, we'll delve into the workings of peer-to-peer car rental services, consider safety concerns and discuss the intricacies of insurance.

How do peer-to-peer car rentals work?

Several peer-to-peer car rental platforms have gained popularity worldwide, providing users with a diverse range of vehicle options.

Peer-to-peer car rental services typically follow a straightforward process:

  • Registration: Both car owners and renters must register on the platform. Owners provide details about their vehicles, including make, model and condition, while renters submit their personal information and driving credentials.
  • Listing a vehicle: Car owners list their vehicles on the platform, setting rental prices, availability and any additional conditions such as mileage or distance restrictions. High-quality photos and detailed descriptions are often encouraged to attract potential renters.
  • Reservation and payment: Renters browse available vehicles, choose the one that suits their needs, and make a reservation. Payment is typically handled through the platform, ensuring a secure and streamlined transaction.
  • Vehicle pickup and return: Car owners and renters coordinate the pickup and return of the vehicle. Some platforms offer keyless entry options or utilize lockboxes to facilitate seamless exchanges.
  • Additional fees: If the car is returned requiring repairs or extra cleaning, additional fees may apply.

Safety risks with peer-to-peer car rentals

While peer-to-peer car rental services offer numerous benefits, safety is a primary concern for users, both as renters and as car owners.

After all, if you're an owner, you are letting people know the general location of your car and renters will know the specific location. This can make it a target for theft. Safety features might not be able to prevent all bad actors. The Federal Trade Commission encourages reporting fraud or bad experiences related to peer-to-peer car rentals[2]

These platforms implement various safety measures to mitigate risks, including:

  • User verification: Platforms often require users to undergo identity verification and submit valid driving credentials. This helps ensure that both car owners and renters are who they claim to be.
  • Rating and reviews: Users can rate and review each other after completing a rental on Turo. On Getaround reviews are a bit less transparent. These ratings provide valuable insights into the reliability and trustworthiness of both parties.
  • Insurance coverage: Most peer-to-peer car rental platforms offer insurance coverage to protect both owners and renters. However, the extent of coverage can vary, and users are encouraged to review the terms and conditions to understand the level of protection provided. 

However, there may be other steps you can take to improve your safety.

Protecting your vehicle

If you're considering renting out your car on a peer-to-peer service, you may want to take additional steps to make sure you're protecting your vehicle and your own personal privacy. These enhanced security measures could include:
  1. Installing security devices: Dash cams that record continusouly, GPS trackers and geofencing can be helpful for monitoring your car both during and between rentals. 
  2. Regular maintenance: Increased usage can lead to wear and tear, so keeping up with maintenance can help maintain your vehicle's value. Set aside a portion of your earnings for maintenance and unexpected repairs. 
  3. Set limits to your rental terms: Consider setting specific rental terms that align with your comfort level and the intended use of your car. For example, you might restrict your car to local driving only or limit the maximum distance per rental.
  4. Understand the laws around peer-to-peer car rental in your area: Familiarize yourself with local regulations and restritions. Consider consulting with a legal professional to understand the full scope of your liabilities and responsibilities as a car owner in a peer-to-peer rental scenario.
  5. Regularly review your insurance: Some insurance companies offer products specifically designed for those using their cars for peer-to-peer rentals. Understand the claims process for the peer-to-peer platform’s insurance and your own. Knowing the steps can expedite resolutions if an incident occurs.

Car accidents and insurance on peer-to-peer car rental apps

There are two sides of insurance concerns for peer-to-peer car rental because there are two or more parties in the equation: the car owner and the car renter. Let’s look at the renter first.

Insurance concerns as a renter:

If you’ve used a traditional car rental company before, you know that your existing coverage will sometimes extend to a rental car, but not always. Sometimes your credit card might provide rental car coverage as well. If neither of these is an option, then it’s up to you to buy coverage from the car rental company.

So how does this work with peer-to-peer rentals?

  • Your personal insurance: For many of these platforms, you can use your personal auto insurance coverage to cover any accidents or damage that occur while you’re driving your rented car.
  • Platform-provided insurance: Many peer-to-peer car rental services offer protection plans, so you can purchase liability, collision, and comprehensive coverage from them for your trip. However, the specific terms and coverage limits can vary between platforms. This works well if you’re someone who doesn’t own a car and thus doesn’t carry insurance full-time.
  • Communication with the platform: In the event of an accident, users are typically required to report the incident to the platform immediately. The platform will guide users through the necessary steps, which may include providing details, photos and filing a claim.

Insurance concerns as a owner

Now let’s say you’re looking at things from the other side. You’re considering renting out your car on one of these services. How can you make sure you’re protected against damages? 

The platforms offer protection plans through third-party liability companies. For example, with every host plan, Turo includes a standard $750,000 in coverage through Travelers. You can also choose from multiple levels of protection for car repairs and damage[3].

Wrapping up

Peer-to-peer car rental services have provided another way for people to access transportation, offering a convenient and flexible alternative to traditional rental agencies.

With the popularity of platforms like Turo and Getaround users can choose from a diverse range of vehicles for various needs. While safety is a priority for these services, users should be aware of insurance coverage details and follow proper procedures in case of accidents. As the sharing economy continues to thrive, peer-to-peer car rental services remain a testament to the evolving landscape of modern transportation.