Peer-to-Peer Car Sharing Risks

Posted July 14th, 2015 by Ashley Kane

Cars are valuable assets and yet, when you think about it, they aren’t in use much of the time. Most car owners commute with their vehicles each day and then leave them sitting for eight hours in a parking lot. Unless your job involves driving frequently, chances are your car has a lot of downtime. Where’s the worth? This is where peer-to-peer car sharing comes into play.

What Is P2P Car Sharing? 

In recent years, people began considering how to keep their vehicle in use. To capitalize on their cars’ worth, multiple grassroots programs started. Similar to ridesharing services like Uber and Lyft, P2P car sharing allows a vehicle owner to make money with their car. However, instead of driving other strangers around like a taxi, an individual simply rents their car to another driver nearby for a short period of time.

More: Rideshare insurance for Lyft and Uber drivers

FlightCar, RelayRides, and Getaround all operate by renting your car by the hour to those around you. Typically, these businesses collect a fee and you end up with around 70% of the return. The cars are rented cheaply, around $5-$15 an hour and frequent users pay a monthly fee.

Sounds like a great idea, right? Perfect for cities and perfect for those with long workdays. While you’re at the desk, your car can make money on its own time! You can also choose to share your car only when it is convenient for you.

Even Ford has now jumped on the P2P bandwagon, hoping to help owners offset their monthly car payments by setting them up with a peer-to-peer car sharing service. Launching in six US Cities, drivers can rent out their cars through Getaround and those who enroll will first be screened and approved by the company.

If you can rent out your house when you aren’t using it with AirBnb, why not do the same with your car? First, though, you might want to consider these risks.

Beware the Risks:

  • Permissive Drivers

Most car insurance policies extend coverage to anyone that the car owner lets drive their vehicle. This is called permissive driver coverage and is under a driver’s personal policy. However, rarely, if ever, is this allowed for commercial use. If the P2P program you’re a part of doesn’t offer auto insurance coverage for those driving your vehicle, take the time to research your options. Consider buying commercial auto insurance to be sure you and your car are protected.

  • Liability

Who’s liable? If your car malfunctions or has a mechanical problem due to poor maintenance, who will be blamed? If another driver is operating it at the time, are they culpable or are you? You might want to consider purchasing extra liability car insurance, just in case.

  • Gap Time

Think about all possible scenarios. Your car is parked in a lot and gets hit by a driver who leaves the scene around the time a renter is coming to use your vehicle. Will your insurance cover the accident? Some P2P companies are starting to use data recorders to track mileage, time, and who is operating the car to help determine the blame in fender benders.

  • Higher Risk

Your auto insurance rates are based on your personal use of the car. Beware that car sharing exposes your car to greater risk with unfamiliar drivers, more time in traffic, and locations you may not usually drive in. There is the possibility that your own premium will increase if your car is in an accident while it is rented.

When it comes to peer-to-peer car sharing, the most important thing to do is obtain coverage. Whether you’re covered through your own policy or through a car sharing program, know the insurance details so that you won’t be blindsided by unexpected costs.