If you’re anything like me, you’ve discovered that there is a whole new world of rental car options when traveling for leisure, business, or even while your car is being serviced or repaired.  The days of the national brands being the only option are waning, giving way to a new car-sharing generation who is willing to rent out personal vehicles when they themselves are not using them.  It is a similar concept to that of Airbnb, Home Away, and other home-sharing labels.  Cars for rent on sharing platforms offer private passenger vehicles that are owned by individuals like you and me and are willing to part with a vehicle for a few days or even a few weeks in turn for compensation. 

My wife, Jen, and I have used the Turo car sharing platform a few times when visiting our two sons at college in Colorado.  We’ve found the pricing, the selection of cars, and the flexibility of Turo’s pick-up and drop-off procedures to be more our style.  We simply book, unlock, and go, skipping the rental counter altogether.  In some cases, the owner of the vehicle will even offer personalized curbside pickup and drop off at the airport. 

Turo started renting cars in 2010 in Boston under the name Relay Rides.  Now headquartered in San Francisco and under the name Turo, the company has expanded into many major cities in the US, Canada, and abroad.  In addition to their great website they have an app that tracks your trip history, is a portal for communicating with the car owner, and allows you to download photos of the vehicle as an added layer of security. 

As with any rental agreement, there are always some things that you need to know before renting whether through Turo (or other car-sharing platforms) or a traditional company like Hertz or Avis.  Remember that your insurance will always treat the rental as if it were your own, but there may be some greater expectations from the rental company.  Here is a shortlist of things to consider:

  1. Liability coverage on your personal auto policy will transfer to a Turo or rental car, but only to the extent as described in the insuring agreement.  The General Provisions of the policy describes the policy territory as the United States, its territories or possessions, Puerto Rico, and Canada.  If you are traveling to any other country other than this, you will need to purchase primary liability coverage.  
  2. If the rented vehicle is damaged, your personal auto policy may repair the vehicle with aftermarket parts rather than OEM.  Regardless, the car now has a damage history that will show up on a CarFax report which could affect its resale value. This is called “diminished value” and the rental company could make a claim against you for the value difference. 
  3. If the damage to the rented vehicle is considered a total loss, your personal auto policy will pay the Actual Cash Value (ACV) of the vehicle at the time of loss, not Replacement Cost (RC) nor a brand new vehicle.  The ACV is based on the age, mileage, condition of the vehicle, and comparable values in your area.  The rental company will need to replace the vehicle in their fleet and they will expect to purchase a new vehicle to do so.  This may not be true with a car share vehicle since, in most cases, you are renting vehicles that are not as new as vehicles in rental company fleets. 
  4. If damaged or totaled, the rental car will be out of commission for a period of time until it can be repaired or replaced.  In the meantime, the rental company will experience a financial loss because they are unable to rent the damaged vehicle.  This is called Loss of Use and they may try and hold you responsible for this. 
  5. Your personal auto policy may also have specific exclusions such as wear and tear, mechanical breakdown, and road damage to tires.  This is especially important to consider with car-sharing vehicles since the maintenance and condition of the vehicle (although monitored by Turo via renter reviews) is typically the responsibility of the vehicle owner.  During my last trip to Colorado, I found myself checking the oil and coolant of the vehicle more than I would have with a traditional rental car because it was an older vehicle with fairly high mileage.  I also found myself treating the vehicle with a higher level of care such as taking it through a car wash, understanding that it was owned by another person rather than a corporation.
  6. Finally, there may be some additional administrative fees that are charged by the rental company for the burden of processing the claim.  Administrative fees are not covered by your insurance policy and you will be responsible to pay these.  Also, keep in mind that your comprehensive or collision deductible will apply in most cases. 

Renting a vehicle, whether through a ride-sharing platform like Turo or a traditional rental company, should be an exercise in personal risk management.  Consider the limitations of your personal auto policy along with the many other factors at play (age and make of car, time of year, etc.) and ask yourself how much risk you are willing to assume yourself.  

Most rental companies (including car share platforms) offer additional peace of mind with their own insurance protection.  Loss Damage Waiver is physical damage protection which does not hold you personally responsible if anything goes wrong; no question of value, no issue of loss of use and no deductible or out-of-pocket expense. 

Understanding your insurance policy and the potential exposures is the key to determining which coverage is adequate for you.  We all have our own level of risk tolerance but knowing the facts ahead of time leads to easier conversations when there is a claim.  Please call FIFS and talk with any of our professional advisors if you have questions about your insurance coverage.  We will help you make Smart Choices for a Secure Future