Peer-To-Peer Car Insurance For Your Side Hustle

Nov 6, 2020 | Business Insurance, Personal Insurance

Peer-To-Peer Car Rental and Insurance

If you own a mobile car that usually remains parked most of the time and needs some extra cash, or if you are eager to rent a vehicle for less without heading to the farthest airport, you could be a prime candidate for peer-to-peer car sharing. This is becoming an increasingly popular peer-to-peer car-sharing side hustle. This is when a person rents out their privately owned vehicle to a stranger who will use their car for a predetermined fee. You should, of course, be ready before you rent out your personal vehicle, particularly getting peer-to-peer car insurance. We take a good look into this side hustle and what it takes to protect your car.

What is a Peer-To-Peer car sharing model?

What’s peer-to-peer car sharing? Peer-to-peer car-sharing is when car owners rent out their vehicles for short durations.

Peer-to-peer vehicle sharing lets car owners rent their automobiles to neighbors. This is the next step in contemporary car sharing.

When you don’t need your car, you may lease it to someone else. Person-to-person vehicle sharing is peer-to-peer. With this method, you may rent an automobile from its owner.

This is the future of mobility and transportation.

Mobility’s future will transform the car industry. Mobility is important because individuals need to go to work or school, see friends and family, and travel. Peer-to-peer car-sharing improves mobility.

Peer to peer startups is included in a group of online organizations that helps the growth of the sharing economy.

They offer an online platform where automobile owners can advertise their vehicles for hire and consumers may choose a suitable vehicle. This peer-to-peer automobile sharing is like Airbnb or Couchsurfing, where users rent homes.

Social networks and smart phone technology have affected peer-to-peer automobile sharing in the digital era. Sharing economy is a major contemporary aspect. Peer-to-peer automobile sharing is also included.


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Peer to peer car sharing is great for car owners and non-car owners alike.

It allows car owners to participate in the sharing economy. An opportunity that gives them a location to help others who don’t own a car drive one. Peer-to-peer vehicle sharing assists car owners and those who require a car since most automobiles are parked 95% of the time.

Peer-to-peer car sharing is facilitated by third-party services.

These online networks are accessible by websites or smartphone apps to match potential renters with owners choosing to loan out their cars in specific markets throughout the country. The following said services perform background checks on each potential vehicle owner and renter to ensure that they have clean records and auto insurance before they could lend the car.

Peer-to-peer car sharing is a better alternative.

Compared to traditional providers like Hertz, Avis, and Zipcar, peer-to-peer car-sharing services may be a significant improvement. In February 2015, the average active owner on RelayRides made $340, while the typical renter saved 30% compared to using a conventional automobile rental service.

It’s important to distinguish between “ridesharing” services and peer-to-peer automobile sharing. Using smartphone applications such as those offered by Uber, Lyft, and Sidecar, drivers with their own automobiles may connect with clients in need of transportation.

As a substitute for traditional automobile rentals, peer-to-peer car sharing has become more popular. It operates on a model somewhat unlike that of Airbnb or Uber. There are, however, certain key distinctions between them that you should be aware of.

Through this service, automobile owners in a certain region may list their cars on a smartphone app and rent them out to interested parties. The purpose of many various sites offering this service is to make automobile rental a more convenient and affordable option.

Peer-to-peer car sharing has ease of access.

Possible renters utilizing these applications don’t need to wait at automobile rental locations in line while their paperwork and credit card details are processed. They may pick up the vehicle from the curb for cheaper than standard automobile rental businesses. Such platforms can also help auto owners optimize the value of their underutilized cars.

Of course, this causes debate. First, users of this service may hire a recalled automobile that is hazardous to operate. Possible renters should check the VIN of any automobile they would hire to ensure its safety. In certain circumstances, the automobile was simply in an accident, thus it’s crucial to constantly double-check with car owners.


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Peer to peer car sharing: A Smart Idea

Peer-to-peer car sharing is a kind of collaborative consumption in the US. Similar to Streetcar and Zipcar in the 2000s. Peer-to-peer car-sharing replaces a fleet with owners’ cars. When not driving, participants rent out their automobiles. 8% of Americans drive.

Businesses in this industry screen owners and renters and provide a website or mobile app for reservations and payments. 25% to 40% of revenue covers car renter insurance, operating costs, and roadside assistance.

Internet, mobile, and location-based services have aided these companies. Carsharing has increased. Today’s generation is less interested in car ownership.

Simple Business Model

Carsharing’s business concept is straightforward. However, insurance and laws complicate the market. Some car-sharing networks need your own auto insurance to pay claims, even though most plans prohibit renting or driving car-sharing cars.

Who are the key players in the peer-to-peer car-sharing lane?

GM is an iconic automaker and Avis-owned Zipcar has been around for a while. However, they’re different from Peer-to-peer. Avis provides several short-term rentals in residential neighborhoods.

GM launched peer cars, enabling owners in certain locations to rent their own cars via Maven. Chevrolet, Buick, GMC, and Cadillac owners in Chicago, Detroit, and Ann Arbor may rent 2015-model vehicles and trucks. This program expands GM’s Maven car-sharing network, which leases GM-owned automobiles. GM hopes to expand to additional locations this year.

Gig work legislation

Peer-to-peer car sharing may be cheaper and easier than typical car rentals for idle automobiles. This is contentious, like Uber and Lyft.

Several vehicle rental lobbies and trade organizations want to regulate peer-to-peer car-sharing operators like rental firms. They say they’re like Uber and Lyft and software firms, not taxis. Most car-sharing networks say they don’t own a fleet of rental cars, hence they’re not a rental company. They provide a software platform for automobile owners to make extra money.

Peer To Peer Car Insurance

How does insurance usually work for peer to peer car sharing? Any vehicle owner wants to make sure that their property is covered and protected for any eventuality. Here are a few Important key points on how peer to peer car insurance works.

  • To be insured, you must get car-sharing business insurance. 
  • Your personal car insurance covers rentals, but it doesn’t include peer-to-peer ridesharing.
  • Other car-sharing firms’ basic insurance policies have minimal limitations, so it’s best to pay extra for better coverage.
  • Claim deductibles for renters range from $1,000 to $3,000.

Click the video to learn about Auto Insurance Basics.

Peer To Peer Car Rental Insurance Coverage And Exclusions

Many vehicle insurance contracts have had this phrase for years. If you’re unclear about coverage, call and ask. Certain car-sharing networks operate knowing that a renter’s coverage will reimburse some costs if the renter damages the car they hired.

If I rent a car through a peer-to-peer car-sharing service, am I covered under my own insurance?

Auto insurance policies vary widely, so check yours. Many auto insurers don’t cover peer-to-peer vehicles. Gusner’s policy excludes any third-party rentals. It may not cover any car utilized in a personal vehicle sharing scheme. Personal sharing programs like ride-sharing are not covered by their liability, medical payments, bodily damage, or uninsured driver coverage. Always read your policies and note these. Traditional automobile rentals are insured under a personal coverage.

If I rent out my car through a peer-to-peer car-sharing program, does my insurance cover the car?

Not really unless you have a commercial rather than a personal auto insurance policy. Personal policies now exclude peer car-sharing networks.

Most car-sharing services usually provide free commercial auto insurance coverage for owners, renters, and third parties. However, terms and policies will differ depending on each company. State-specific limits and statutes are other factors that will define what kind of coverage each company will offer. The kind of coverage that usually gets included through the coverage of peer to peer car sharing services are the following:

Liability up to a Million-Dollar one limit per occurrence

This is usually the primary coverage for the car owner that will take effect during the time the owner is delivering the vehicle to the renter and ending when the car is already delivered. However, this is not in effect once the owner has already retrieved the car or he’s already on the way to get the mobile. For the renter, the coverage is usually secondary to both the renter’s personal auto policy and any additional coverage they may have including coverage they received from a credit card. This means that an accident or injury claim is paid out by the peer-to-peer car-sharing service only after the renter’s personal or supplemental policy has already maxed out or denied coverage.


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Uninsured/underinsured motorist coverage for the renter

This is usually not exceeding the statutory minimum limit allowable by state law which can mean zero coverage or none at all depending on the state. 

Personal injury protection for the renter

This is usually not in excess of the statutory lowest limit allowable by state law.

Comprehensive and collision up to certain limits

Generally speaking, theft, fire, vandalism, and property damage are covered up to the car’s monetary worth. This protection doesn’t cover damage that occurs while the automobile is being delivered, “wear and tear,” pre-existing damage, or personal things left in the car. Renters can opt to rely on their own policy if the automobile is damaged/stolen/lost. Peer-to-peer car-sharing services provide extra insurance packages. When they pick this, they’re covered minus a modest to large deductible.

Some differences between a driver’s Personal Insurance Policy and a Commercial Policy:

Personal Auto

Personal vehicle policies don’t cover incidents that occur when a car is being used for business reasons. Peer-to-peer car-sharing businesses frequently offer supplementary liability coverage. This pays for claims your personal policies won’t cover. Many think peer-to-peer car-sharing firms’ commercials are enough. Experts warn that certain firms’ offers may not provide enough security, especially for automobile owners.

Commercial Auto

Experts urge automobile owners to get a commercial auto insurance policy that covers property damage, bodily injury liability, no-fault and personal injury, collision, uninsured motorist, and total physical damage. Insurance coverage might cost up to $1,000 per year.

Another danger is if an accident claim exceeds your personal insurance policy or peer-to-peer car-sharing service coverage limit, including high medical expenditures or a lawsuit resulting in death or serious injury. These charges may be incurred.

State Regulations

State insurance laws and regulations vary. Each state determines whether the owner or renter’s own insurance or peer-to-peer car-sharing insurance is the major emphasis.

California, Washington, and Oregon have established legislation that prevent a personal auto insurance policy from being canceled or nonrenewable for participating in a car-sharing scheme. These regulations don’t require owners’ personal motor insurance to cover claims, though.

Note On Personal and Commercial Coverage

The personal policy cannot include comprehensive and collision insurance for incidents while your automobile is rented. Some insurance companies in some states may not include, terminate, or renew personal motor policy coverage or may increase premium rates if you use a peer-to-peer car-sharing program.


Click the video and learn more about Collision Insurance Coverage.

Are more insurance companies offering riders to accommodate peer to peer car sharing just like for ride-sharing like Uber or Lyft?

According to Gusner, no. However, it is an industry where we can see further growth soon since auto insurance companies have expanded their policies with specific ridesharing coverage since they found a market once Uber and Lyft operated.

Some insurance companies may just also recommend people renting out their vehicles to just get a standard commercial policy. For the owner, they actually don’t have other options if the personal policy doesn’t really cover the rental other than purchasing coverage from the company running the peer-to-peer car-sharing program.

How will liability, comprehensive, and collision work with company insurance plans?

Liability car insurance will cover the damage you caused to another car and will pay for the medical costs of the people who were injured in the accident. However, the liability will not cover the vehicle you are driving or pay for your own injuries. Collision coverage will instead pay for the damage to the car you’re driving regardless of whose fault it is. Comprehensive Auto insurance will cover vandalism and theft. It will also cover damages due to hail, flooding, and fire.


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Do I get commercial insurance if I join in on providing P2P car-sharing services?

According to Gusner, she greatly recommends talking and consulting your car insurance company to be covered properly when you decide to participate in a peer-to-peer car-sharing program. Your insurer will tell you what your personal policy covers and if you need to upgrade to a commercial policy. It is important to be really sure so you don’t get into trouble or into a financial bind if you purchase coverage that you don’t need.

What risks should owners who participate in peer-to-peer car-sharing be aware of?

Gusner says that “Some of the risks would be, of course, your car being damaged and placing more mileage on your vehicle. These things can increase your insurance rates. In addition, if you don’t inform your insurance company that you’re renting out your car, your insurance policy might get canceled. You’ll have a hard time finding another company that will offer you a policy.

She added that if you don’t carry a commercial policy and if your personal policy doesn’t cover peer-to-peer car sharing, you then need to buy physical damage coverage; both comprehensive and collision from the ride-sharing company to have your vehicle paid for by your insurance.

Another risk to take a look at and check is if you have a basic and simple plan from your insurance company. You’re only safeguarded for state minimum liability amounts which are low and can only be used in a non-serious accident.

What about peer to peer car sharing risks for renters?

Regarding peer-to-peer car-sharing risks for renters, one of the risks is that they don’t have insurance for the car so they need to purchase the guest insurance. If not, one of the consequences is they will be personally financially responsible if they destroy the car while using it.

Gusner adds that even though there is coverage in place if you destroy a car, you still have to pay out of your pockets. After you file a claim and depending on which coverage plan you selected, you will initially pay a fee of $500 to $3,000 depending on the first damage assessment which may or may not be refunded in the end.

This will depend on your situation. You will also have to pay a claim handling fee of up to $575. So, in the end, you will have to pay around $1,075 to $3,575 to file a claim. You will have to wait to be reimbursed which will depend on the amount of damage. Depending on who is at fault and other factors, you could receive a partial or a full refund or even get nothing at all.


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Insurance Companies That Allow Peer To Peer Lending Car Rental

Getaround, JustShareIt, and Turo are the top three most popular P2P car-sharing services in the US.  Info from caranddriver.

Getaround

A limit of $1,000,000 in case of damage. Full coverage in the event of an accident (up to the car’s real monetary value). Coverage for property damage caused by uninsured motorists (to the extent required by law in the state in question). Excessive wear and tear is covered (up to $750).

JustShareIt

Liability insurance for $1,000,000. Coverage for both collision and comprehensive damage (to a maximum of $149,000 or the vehicle’s real cash value). Excessive wear and tear is covered (up to $2,500).

Turo

Guaranteed coverage of $1,000,000 in the event of any lawsuit. Provides compensation for material losses (up to the car’s real monetary worth, but no more than $75,000). Obtaining a substitute car while yours is in the shop.

Before signing up for car sharing

Before participating in peer-to-peer automobile sharing, study the fine print on any coverage and costs. Check the company’s website to see what insurance they provide. Do ask questions.

You should also advise your auto insurance carrier that you want to engage in peer-to-peer car-sharing to guarantee both parties are covered. Ask your insurance agent about minimum and supplementary coverage. Avoid overpaying or duplicating coverage.

According to research, renters should have $100,000 bodily injury, $300,000 per accident, and $100,000 property damage liability coverage. Increase your uninsured/underinsured motorist limits. If you don’t own a vehicle, get non-owner liability insurance.

Ask your credit card company whether they offer free additional auto insurance and if your card may be used for peer-to-peer car-sharing.

This service needs further thought. Possible owners should respond to auto insurance liability coverage. For triple protection, we recommend obtaining comprehensive/collision and commercial insurance. Make sure your peer-to-peer car-sharing business checks potential renters for accidents and infractions.

We hope that TeamAIS was able to shed better light on the peer-to-peer industry for you. We also hope to provide insight on what peer to peer car insurance can do best for your side hustle.

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