With the increasing popularity of peer-to-peer car sharing, many people are turning to platforms like Turo to earn extra income and save money. This trend presents both public and private benefits, including reduced traffic and financial gains for car owners. However, it also raises important questions about insurance coverage.
What is Peer-to-Peer Car Sharing?
Peer-to-peer car sharing programs (PVSPs), sometimes referred to as personal vehicle sharing programs, allow individuals to rent their vehicles to others. Unlike traditional rental companies, PVSPs like Turo do not own the vehicles themselves. A 2022 California Court of Appeal case, Turo Inc. v. Superior Court, affirmed this distinction, clarifying that Turo acts as a platform connecting car owners with renters.
The Insurance Question: Are You Covered?
The critical question for car owners considering PVSPs is whether their personal auto insurance policies will cover accidents involving their rented vehicles. The answer, unfortunately, is often “no.”
Consider this scenario: Owen, working from home, decides to rent out his car through Turo. Richard, a visitor, books Owen’s car. While driving, Richard runs a stop sign and crashes into Debbie. Richard’s insurance isn’t sufficient to cover the damages, and Debbie seeks compensation from Owen. Owen has personal auto liability insurance. Will Owen’s policy cover the accident?
Policy Exclusions and State Laws
Unless Owen purchased Turo’s liability insurance or has a commercial auto policy that covers rentals, his personal auto insurance likely won’t provide coverage. Many personal auto policies contain exclusions for accidents arising from car sharing or using a vehicle for compensation. The 2022 case, Progressive Direct Ins. Co. v. Waris Hydrie, saw a Minnesota federal court apply a PVSP exclusion to deny coverage for a Turo rental.
Furthermore, states are enacting legislation to address insurance coverage in the context of car sharing. California Insurance Code section 11580.24 and Florida Statute section 627.7483, along with similar laws in Maine and New York, permit insurers to exclude coverage for car sharing-related accidents.
In Owen’s case, if his state allows such exclusions and his policy reflects this, his insurance would not cover the accident. Even if state law doesn’t explicitly address car sharing, courts may uphold policy exclusions as long as they comply with state law and don’t violate public policy. A Wisconsin court, in Morris v. Buttney (1999), applied a “public or livery conveyance” exclusion to a FedEx delivery accident, arguing that the car was available to the general public for carrying property for a fee.
The Bottom Line: Understand Your Coverage
With PVSPs becoming more prevalent, car owners must understand how their insurance policies apply to car sharing. Renting out your car can be a financially appealing option, but it’s essential to proactively review your policy.
Before participating in a PVSP, carefully examine your insurance policy and consult with your insurance agent or broker. Consider obtaining the appropriate insurance through the PVSP platform or a commercial auto insurance policy. Companies like Turo offer liability coverage and vehicle protection for hosts.
Disclaimer: The opinions expressed are those of the author and do not reflect the views of Reuters News.
