How Car Insurance Works for Personal Car Rental

January 09, 2019

maroon suv at sunset
What if your car could pay for its own insurance?

It’s possible. If you live in a large city with a personal car rental service, renting out your car could make you enough cash to pay your regular insurance bills — plus extra. Companies like Turo and Getaround make it easy to rent your car to local drivers for a few days each month.
“Over 350,000 vehicles have been listed on Turo to help hosts offset the cost of ownership,” the company says. “Many Turo hosts list their cars so they can cover their monthly payments, while others simply want help managing insurance and maintenance costs.”

We love the idea of putting your car to work when you’re not using it. But can you really make good money? And what does car insurance cover when you’re renting out your car?

Here’s the super-quick summary: You can earn a lot, if you have the right car. But you should be aware of how insurance covers you — and if you’re just looking to cut your car insurance bill, Compare.com is still the quickest way to find the best deal.
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Will Renting My Car Pay Off my Car Insurance Policy?

That depends on a few factors, including what kind of car you drive and how much your regular insurance costs. You can make more money renting out a brand-new Audi than a 10-year-old Corolla (no surprise), but your insurance costs for the Audi are going to be a lot higher.

You don’t have to own a luxury sports car to make money with personal car rentals. In fact, when you compare daily rental rates to estimated monthly car payments, the top-earning vehicles on Turo are the basic — but still fun — drivers. In the number-one spot is the Jeep Wrangler, which rents for $91 per day, on average. Close behind are the Ford Mustang ($66 per day) and the Fiat 500 ($38).

Let’s look at a 27-year-old driver who lives in West Hollywood, LA. He has a good driving record, a new car and basic car insurance that satisfies the 15/30/15 California state minimum. We used Compare.com to calculate his best deal on car insurance and the Turo Carculator to determine his average earnings (after Turo’s deductions for its own insurance protection).


Vehicle Monthly Car Insurance Monthly Rental Income
Jeep Wrangler $177 $541
Honda Civic $192 $440
Honda Accord $151 $361

 
Not bad! For our hypothetical driver, his monthly rate — if his earnings match the average — is generally enough to cover his car insurance twice over. So yes, it’s possible for your car to pay for its own insurance. But (there’s always a but) you will have to pay for additional insurance if you rent out your car through Turo.

How does insurance work when I’m renting out my car?

Here’s the good news: When you become a Turo host, the company covers you with a $1 million liability insurance policy from Liberty Mutual. This liability insurance protects you against lawsuits for injuries or property damage, should the person driving your car cause an accident.

That’s a relief. But that insurance isn’t free. Turo requires hosts (unless they’re covered by a commercial car insurance policy, which you probably aren’t) to choose and pay for a Premium, Standard or Basic insurance plan.

All three plans give you $1 million in liability insurance, plus physical damage protection for the value of your car up to $125,000. Choose Basic, and you keep 85 percent of the money your car earns, but you’ll have to pay a maximum $3,000 deductible if your car gets damaged. Standard eliminates the deductible, but you keep 75 percent of the money. Premium gives you perks like wear-and-tear coverage, but you keep only 65 percent.

Can’t you just use your regular car insurance? No. For one thing, your insurance most likely excludes coverage when you’re renting out your car. On the flip side, your car-sharing insurance won’t cover you, the owner, when you’re driving in your own vehicle.

A guest must also have their own personal car insurance to rent your car, or they must purchase insurance from Turo.

What happens if you’re renting out your car and the driver gets into an accident?

The first thing you need to do is file a claim right away. Turo says claims requests received more than 24 hours after the end of a trip won’t be considered. You’ll have to figure out whose insurance will cover the damage: Turo’s insurance or the guest driver’s policy.

Will your own personal car insurance be affected by a renter’s accident? Here’s what Turo says: “As a general statement, we believe that your insurance should not be affected if your vehicle is covered under one of Turo’s coverage plans. … If the guest gets into an accident, our insurance policy will go into effect. That should leave your personal policy untouched.”

However, in some states, parts of your car insurance coverage may “follow the car.” That means that uninsured motorist/underinsured motorist coverage (UIM/UM), personal injury protection (PIP) and liability may apply to the person driving the car, even if it’s not you. That means, in the event of an accident, your car insurance costs could potentially go up. In the worst-case scenario, a guest driver could cause a serious accident in your car that exceeds $1 million in liability coverage. 0.

Here’s the upshot: If you don’t need your car every day and you want to earn some money, personal car rental might be something worth trying. Just check with your insurer to make sure you’re protecting yourself — and if you feel like you’re paying too much for insurance, maybe it’s time to find a better deal on Compare.com.

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