Car share insurance protects drivers who rent vehicles from a car-sharing service or peer-to-peer car rental service. Car share insurance coverage can vary depending on the car-share service you use and your state’s minimum requirements.
What is Car Sharing?
A car-sharing service provides drivers with vehicles on an as-needed basis. Car-sharing services, such as Zipcar, often include car insurance as part of the rental cost. Peer-to-peer services like Turo also offer insurance as part of sharing a car. However, with a peer-to-peer service, the insurance situation is a little more complicated because you’re using a car owned by another consumer instead of a rental company.
As NerdWallet points out, if you don’t drive very often, participating in a peer-to-peer service is a great way to earn some extra money by letting other people rent your car. You can use a third-party service like Turo, Getaround, and JustShareIt to connect with prospective renters. These companies perform background checks to guarantee that the car owner and the renter both have clean driving records and insurance. They also make sure that the cars are in good condition.
Keep in mind that, as ValuePenguin notes, car sharing is not the same as ride-sharing. When you use your car in a ride-sharing program, you drive passengers to their desired destinations. In a car-sharing program, you loan your car out to other drivers or borrow a vehicle from another owner participating in the service.
Car Share Insurance
NerdWallet notes that most insurance policies include exemptions if you use your personal vehicle for commercial purposes. That’s why it’s very likely that your current insurance policy won’t cover damage caused by an accident that occurs when you’re loaning out your car. Most car-sharing companies provide insurance policies that protect the owner, renter, and all third parties involved in the rental process. The amount of coverage varies depending on state requirements.
Many insurance companies refuse to cover vehicles when they are loaned out because they don’t know who’s driving your vehicle, and they can’t access the driver’s history. Nerdwallet points out that personal auto insurers also refuse to cover cars that are used to make money. They typically don’t allow drivers to use their personal vehicles for commercial purposes.
What Does Car Share Insurance Cover?
According to ValuePenguin, the typical insurance policy provided by a car-sharing company includes the following:
- Liability – The typical car share insurance policy carries up to $1 million in liability coverage for the driver who is renting the vehicle and the car owner. Depending on what rideshare program you’re a member of, the coverage might kick in as soon as you’re delivering your car to the renter, or it might not start until the renter has the car in their possession.
- Uninsured/Underinsured Motorist Coverage – If the state you live in requires uninsured/underinsured motorist coverage, then the car share company will include that coverage in the insurance policy. Typically, the coverage amount will not exceed the state’s required minimum.
- Renter Personal Injury Protection – Like uninsured motorist coverage, the amount of personal injury protection provided by the car-share service won’t exceed your state’s minimum legal requirements.
- Comprehensive and Collision Coverage – Car share services will provide the vehicle owner with comprehensive and collision coverage up to a certain limit determined by the specific company. This coverage protects the car’s owner from theft and damage to the vehicle. Keep in mind that this coverage doesn’t usually include delivery of the vehicle, normal wear and tear, any pre-existing damage, or if the owner leaves personal items in the vehicle. Renters can purchase a supplemental comprehensive policy from the car-share service.
Peer-to-Peer Car-Share Insurance
According to WalletHub, the three leading peer-to-peer car-share services in the United States are Getaround, JustShareIt, and Turo. A car-share insurance policy from Getaround includes:
- $1 million liability coverage
- Collision and comprehensive coverage (limited to the car’s actual cash value)
- Uninsured motorist property damage coverage (limited to the state’s minimum requirements)
- Coverage for excessive wear and tear (up to $750)
If you participate in the JustShareIt program, you can expect your car-share insurance policy to include:
- $1 million liability coverage
- Collision and comprehensive coverage (up to the vehicle’s actual cash value and not to exceed $149,000)
- Coverage for excessive wear and tear (up to $2500)
Turo members receive the following coverage:
- $1 million liability coverage
- Physical damage coverage (up to the car’s actual cash value and not to exceed $75,000)
- A replacement vehicle if your vehicle needs repairs
- Coverage for loss of rental income (if you’re a Premium member)
- Coverage for exterior wear and tear (if you’re a Premium member)
While Turo’s car share insurance kicks in when you deliver your vehicle to the renter, Getaround and JustShareIt policies are limited to the time that your vehicle is in possession of the renter.
Enterprise CarShare and Zip Car
As WalletHub notes, major car-sharing companies, such as Enterprise CarShare and Zip Car, provide renters with the minimum level of insurance required by the state. This coverage usually includes personal injury protection and uninsured/underinsured motorist coverage. Each car service has its own rules regarding coverage, and limits also vary depending on what state the renter lives in. A car-share insurance policy from Enterprise CarShare typically includes the following:
- Liability coverage (not to exceed the state’s required minimum)
- Collision/comprehensive deductible ($500)
- Liability coverage up to $300,000 and a reduced damage waiver if the renter pays an additional fee
If you rent a vehicle from Zip Car, your insurance policy will include:
- Liability coverage (100/300/25)
- Collision/comprehensive deductible ($1000 “damage fee”)
- Damage fee waived if the renter pays an annual fee of $79
Commercial Car Insurance
If you’re planning on letting drivers rent your car through a peer-to-peer service, you may want to get an additional commercial car insurance policy. As ValuePenguin points out, the policy provided by the peer-to-peer rental company might run out if an accident claim exceeds the policy cap. Then you would have to pay for any remaining expenses out of pocket. Keep in mind that the company providing your personal auto insurance might cancel your policy if you participate in a car-sharing program. Purchasing a commercial policy can protect you from cancelation.
When you purchase a commercial policy, make sure that it includes:
- Liability coverage
- Personal injury protection
- Comprehensive/collision coverage
- Uninsured motorist coverage
Check this out if you need additional information, resources, or guidance on car insurance.
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