You’re not driving your car as much, and it’s just sitting in your driveway. At the same time, extra money always comes in handy. You’re considering using Turo to rent out your vehicle for those times you’re not using it.
Should you do it? Will it affect your auto insurance? Here’s what you need to know.
Turo allows automobile owners to list their vehicle for rent at a daily rate. Renters use an app or web browser to search vehicles and choose the one they’d like to rent. Both owners and renters have the option to purchase insurance.
For vehicle-owners, you have the choice between several levels of coverage. All plans include up to $750,000 in liability coverage. Let’s look at the least expensive and the most expensive form of coverage they offer:
85 Plan: They call this the highest risk, highest reward plan. You have a $2,500 deductible and all damages are paid after you pay that deductible. But you don’t get a replacement vehicle or compensation for a replacement vehicle if your car is out of commission. This coverage costs the least to you upfront but could become expensive if there’s an accident. Plus, you’ll be on the hook for figuring out what to drive until your car is fixed.
60 Plan: There’s no deductible and 100 percent of the damages are repaired for you, plus you can receive loss of income or $50 per day in replacement vehicle reimbursement, but you’ll reduce your payment from the renter by 40 percent. Yes, you’re more protected but you make a lot less money.
The cost for this insurance is a percentage of the total rental price. The renter also gets an option to purchase insurance coverage for a percentage of the total price, too. Both are optional, so either you or the person driving your vehicle can opt-out of coverage. That means if there’s an accident, you could be financially responsible for everything — including legal fees and settlements if there’s a lawsuit.
Turo and Your Auto Insurance
Turo’s insurance options don’t sound bad. It seems to protect your vehicle, and you, while your car is being rented. But there’s a catch: your auto insurance company probably doesn’t allow this use of your car.
Most auto insurance policies won’t cover a vehicle when it’s used for business purposes. Renting out your car through Turo would certainly qualify as a business use. Some insurers are specifically excluding Turo from their coverage. Meaning if you use Turo, you lose your auto insurance completely, even when you’re driving for personal use.
In some cases, you can purchase supplemental coverage for your auto insurance policy that specifically covers you while your vehicle is in use through Turo. But if there’s an accident, it’ll be up to you to prove that your car was being used under the policy specifications to have your claim paid.
You might have “okay” insurance coverage during Turo rentals but it may not be worth it at all if you lose your personal auto insurance or can’t afford the type of policy that will let you rent out your vehicle.
As an independent insurance agency, we strongly advise against renting out your car, the risk of accidents and expensive damage is too high. But if you do, be aware there will be exclusions in your auto policy. At the very least, before you sign up for Turo, give us a call and let us take a look at your current coverage. You may have options you didn’t know about or you may decide the extra cash isn’t worth losing your coverage.