One’s car is a valuable asset that costs money for gas, maintenance, insurance, loan payments, depreciation, etc. An increasingly popular practice to defray the cost of car ownership is peer to peer. This is a practice/service wherein a person rents out their privately owned vehicle to a stranger who will use their car for a short period and for a predetermined fee. Prime candidates for peer-to-peer car sharing are those who own a car that usually remains parked most of the time or if you want/need to rent a vehicle for less without heading to the farthest airport.
Peer-to-peer car sharing is also called “person-to-person car-sharing and peer-to-peer car rental. Peer to peer car sharing (“P2P”) is a new approach, in the modern sharing economy, which makes car usage more reachable or affordable cars for rent. When you do not use your own car and instead of them being parked in your driveway or parking lot, you can earn money from your car by lending or renting it to someone who needs a vehicle. With this method, you can directly rent a car from its owner and make your own agreements with the owner themselves according to your needs.
Mobility is an essential part of society since people need to go to work or school, visit friends or their family, or even explore or travel to different places. P2P is one of the changes and improvements in mobility. Innovations in mobility will bring many changes to the auto industry.
The internet, the growth of social networks and smartphone technology have greatly led to the the development of P2P. Studies have shown that most of the cars are just usually parked for 95% of the time, so with the help of P2P, it helps both car owners and people who need a car.
Some companies like Turo and Getaround provide an internet platform where different interested car owners list their cars for rent and also clients who are able to look for a vehicle for their needs. This is similar to Airbnb. 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. Such entities 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.
The average car renter saves about 30% compared to traditional car rental companies like Hertz and Avis. Possible renters using apps like Turo and Getaround do not necessarily need to wait for car rental centers and waste their time waiting in line before their documents and credit card information are processed. They can easily pick up the vehicle at a convenient location for a less expensive price than traditional car rental companies. Such platforms can also give an advantage to car owners since they can maximize the value of their unused cars.
Zipcar was a sort of car-sharing club, or what I call carsharing 1.0. P2P is carsharing 2.0 (or carsharing on crack). P2P car sharing is not similar to “ridesharing” services. Ridesharing services are the practice of using the mobile apps provided by companies like Uber and Lyft to connect drivers of their own cars to hire passengers looking for transportation.
It is important to note that if you own your own car and have your own insurance, such insurance will usually not cover P2P carsharing. While a traditional vehicle rental is covered, this is not a traditional rental. The insurance market is still adapting to the changes in the vehicle rental/P2P industry. You will need to purchase a car-sharing company’s auto insurance to be covered and don’t skimp on the limits. Also, keep in mind that for the renter, the insurance coverage from the P2P marketplace is usually secondary to the renter’s personal auto policy. 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 policy is maxed out or coverage is denied.
A lot of people think that this commercial coverage given by peer-to-peer car-sharing companies is already enough. However, the insurance from peer-to-peer car-sharing companies may not be sufficient for complete protection, especially for car owners.
Car owners should purchase their own commercial auto insurance policy that provides enough property damage, bodily injury liability, coverage for no-fault and personal injury, collision, uninsured motorist, and complete and comprehensive physical damage. However, please keep in mind that insurance coverage can be expensive and can cost up to a thousand dollars extra per year.
Always keep in mind that auto insurance laws and requirements differ for each state. These all depend on whether the owner or possible renter’s personal insurance or the peer-to-peer car-sharing services insurance is the main focus or the secondary focus.
So, with all of this in mind, there are new and interesting opportunities out there for not just people who want to rent out their cars for extra money to help defray the cost of car ownership, but also renters who can obtain a car for short periods with less hassle and lower costs than traditional car rentals. Most of all, there is an open opportunity for insurance carriers to write the policies needed by not just the vehicle owner but also the renter as well. It is time for the insurance industry to think outside the box and come up with a solution that will enable this growing P2P industry to not only continue to grow but to thrive as well.