The car sharing market surpassed USD $2 billion in 2020, and is expected to grow more than 20% over the next five years. The peer2peer, or “P2P” model, accounts for around 25% of the car sharing market share, and gives private car owners (“hosts”) the opportunity to rent their cars out via an online platform, such as Turo or ShiftRide.
P2P car sharing is a way for car owners to earn extra income. And renting a vehicle through one of these services can be significantly cheaper for people to use than going through a bigger rental company.
But if you're the one listing your vehicle to be shared in an effort to make some extra cash, you might be wondering: how would this impact your personal insurance policy?
Notify your insurance provider — and know your coverage
The majority of P2P apps have what’s known as a “master policy,” which provides insurance coverage when someone is using your vehicle, explains Anne Marie Thomas, director of consumer and industry relations for the Insurance Bureau of Canada. This master policy will provide coverage should someone who is renting your vehicle be involved in a collision.
That said, Thomas says it’s important to let your insurance provider know that you’re lending out your vehicle, and really, you should let your insurance company know any time you are changing the use of your vehicle.
“Once your policy is in force, you're under obligation in the contract of your policy to let the insurance company know that the use of your vehicle has changed,” she says. “Even though there is coverage through an app.”
If you don’t update your insurance provider about your car sharing activities, you could find yourself in trouble.
“Because it is a material change in the use of your vehicle that in essence violates the contract, the contract is null and void,” says Thomas. This means you’d no longer have personal insurance for your vehicle.
Can my insurance company raise my rate if I lend my vehicle to a car sharing service?
One thing that holds some people back from notifying their insurance provider about their car sharing activity is the fear of an increased rate.
On its website, ShiftRide states: “Your own insurance premium will not be affected by listing your car...”
Thomas says drivers shouldn’t be afraid to have this conversation with their provider. “I don't know about increasing your rates,” she says, “But they may say, ‘OK, we don't write this type of business anymore. You have to go somewhere else.’”
In that case, you could decide to not list your vehicle on a P2P service, or find a new insurance provider that does cover vehicles listed on P2P services. You could even find yourself with a better fee than you’re currently paying, as shopping around for car insurance can often score you a better rate.
Thomas notes that many people have been driving less since the start of the COVID-19 pandemic, and that even this change can result in a reduction in your premium.
“There’s always good reasons to keep in touch with your insurance professional, with respect to any change regarding your car situation,” she says.
What happens if someone gets into an accident while driving my car?
If someone gets into an accident while driving your car, they can report it to the P2P car sharing company, or you can once it’s been returned. Depending on the app, you’ll have 24 to 48 hours to report any damage. On their websites, ShiftRide and Turo both ask for clear photos of the damages and a repair estimate that you would like to be reimbursed for by your preferred mechanic.
For small damage amounts (under $1,000), you’ll likely have to pay for the repair yourself and then get reimbursed by the app. For more costly repairs, the app’s insurance provider will work with the repair shop directly. With Turo, you have the option to resolve the damage directly with the guest who booked your vehicle, or file a claim through the app’s insurance. Either way, this should not affect your personal insurance.
“If the vehicle is damaged while being rented via the app... and the app provides insurance, then the claim is dealt with via the app, not the vehicle owner’s personal insurance,” says Thomas.
That’s why when it comes to renting out your vehicle on a P2P car sharing service, you should always ensure the app offers insurance coverage — and read the fine print. It’s better to understand what you’re getting yourself into before you commit.
“Whether you're a lender or the borrower, read the fine print and make sure that you have the coverage you think you have.”
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