While the business idea is straightforward, the new industry is not without problems, particularly insurance and laws. Among the insurance, concerns are that the fine print of certain car-sharing networks states that your auto policy would be the primary source for paying claims, even though most personal plans normally exclude renting or driving car-sharing vehicles from coverage.
In this article, Penny Gusner, the consumer analyst for CarInsurance.com, answers the most frequently asked questions regarding peer-to-peer car sharing, also known as P2P car rental, car-sharing 2.0, and on-demand automobile rental.
Who are the major players in the peer-to-peer car-sharing market?
Turo and Getaround are two of the most well-known but legendary automobile manufacturers like General Motors are now getting in on the act.
Avis owns Zipcar has been operating longer than Turo and Getaround. Still, it is not peer-to-peer—it is owned by Avis, which has a fleet of automobiles garaged in residential areas accessible for typically short-term rental.
GM launched Peer Cars in July, allowing GM owners in a few areas to post their vehicles for hire on Maven, the automaker’s car-sharing platform. Owners of Chevrolet, Buick, GMC, and Cadillac vehicles in Chicago, Detroit, and Ann Arbor can rent their vehicles, model 2015 or newer, when they are not in use.
The program extends GM’s Maven car-sharing network, which rents out GM-owned vehicles. GM intends to expand Peer Cars service to additional cities for the rest of the year.
Peer-to-peer car-sharing makes efficient use of idle automobiles and may be less expensive and easier to rent than standard car rentals. However, it is somewhat contentious, as are ridesharing services like Uber and Lyft.
The vehicle rental lobby and trade groups have been seeking to establish legislation that would regulate peer-to-peer car-sharing providers in the same manner that car rental firms do, claiming that circumventing industry norms provides car-sharing networks an unfair competitive advantage.
However, just as Uber and Lyft argue that they are software companies, not taxi services, Turo and other car-sharing networks argue that because they do not own a fleet of rental cars, they should not be classified as a car rental company and that they are a technology company that provides a software platform to allow car owners to earn extra money.
Is my insurance valid if I rent a car through a P2P car-sharing service?
You should check your policy because conditions vary widely, but many car insurance companies have included language that precludes coverage if you use a P2P vehicle, according to Gusner.
“It might simply state that all third-party rentals are prohibited.” However, my policy expressly states that it does not cover ‘any motor vehicle operated, maintained, or used as part of a personal car shared program.’ “Personal sharing programs and ridesharing operations of any kind are excluded under my liability, medical costs, physical damage, and uninsured motorist coverage,” she continues.
It’s crucial to understand because standard car rentals are typically covered by personal insurance. However, many motor insurers have inserted this type of language into their policies over the last few years. Gusner recommends contacting your insurance for clarification if you are unsure whether you have coverage.
This is especially important to understand before renting because certain car-sharing networks operate under the idea that a renter’s insurance will cover some of the costs if the renter damages the automobile they reserved.