Shuman Roy is an entrepreneur, business owner, and musician. He started RoysNoys, LLC in 2013 as a music production and education service company. He also offers small business consulting and advisory services to help businesses get from start-up mode to turn-key operations. Shuman earned his M.B.A from the Stern School of Business in 2001 and has an undergraduate degree from Manhattan College in ...

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Content Writer & Entrepreneur Shuman Roy

Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Joel...

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Reviewed by Joel Ohman
Founder, CFP® Joel Ohman

UPDATED: Jun 28, 2022

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“RelayRides” is a nationwide car-sharing network where individuals can “rent” their own cars to others in exchange for a fee. Turo is an app that allows vehicle owners to rent their vehicles.

In so many words, you can become your own Enterprise Rent-A-Car and earn up to “$1,000 per month,” according to their website. It’s a great way for owners to supplement income by listing their vehicle on the Turo app. Owners can set the rate, availability schedule and other preferences.

We’re going to spare you the details of how their program works (because we could care less) and delve into the insurance aspect of the deal – because it’s what we do.
Both hosts and renters need additional coverage, however, it works a bit different than a typical policy. If you’re considering using Turo, you should think of the level of coverage you need.
Owners must meet the minimum coverage required by law. You will be required to keep proof of insurance in the vehicle.

Although the “$1,000 per month” might have you fired up, it’s important you understand the insurance implications of this program. What’s covered, what isn’t covered, and where you might end up on the short end of the insurance stick.

We weren’t able to get our hands on an actual copy of the insurance policy, so there are a few details we’re not 100% clear on. But we’ll give you some pointers and you can clarify anything of which you’re not certain.

Tip: When it comes to insurance, the devil is in the details, so have RelayRides go over the coverage with you line by line and ASK A LOT OF QUESTIONS!

Who is the insurance company behind RelayRides?

Good question. We don’t know. According to the RelayRides website, the insurer for both the Owner and Renter of the vehicle is a “national insurer rated A, XV by A.M. Best.” This means the insurer is relatively large as far as insurers go, is very financially sound, and certainly isn’t a fly-by-night company. In fact, this is an “Excellent” rating and the insurer fits into the largest Financial Size category out there…think BIG.

This means you don’t have to worry about calling the insurer to file a claim and hear a disconnected dial tone on the other end. On the other hand, the insurer is probably not a well-branded company or RelayRides would probably be shouting their name from every rooftop (webpage).

Don’t sweat that though. Some of the largest insurers in the world keep a low profile, as they do not need to advertise night and day to brainwash you and justify their extremely high rates.

All we could find is that Turo partners with Liberty Mutual to provide three tiers of coverage: basic, standard, and premium. The cost of each tier depends on the percentage of the total amount owners charge to rent their vehicle.

You can also cancel Turo coverage, but you need to have commercial insurance. So if you decide to opt out from Turo Insurance Program, you will be required to purchase your own commercial car insurance.

Let’s not waste any more time and get to the coverage.

[How much do insurers spend on advertising?]

Let’s not waste any more time and get to the coverage.

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How to get insurance for owners?

As a vehicle owner, you will be covered up to $1,000,000 (combined single limit) per occurrence for bodily injury and property damage the renter may cause to a third party while driving your car.

This means your assets are very well protected in the event of an accident – which is good because it certainly wouldn’t be your fault if one occurred.

Let’s quickly clarify that statement. Whether or not the accident is “your fault” does not dictate whether or not you can be sued and found liable for the resulting damages if you are the registered owner of a vehicle. Different states have different laws relating to “ride sharing” so you’ll want to brush up on that before taking the plunge.

The policy also offers physical damage coverage for harm to your vehicle resulting from a collision or comprehensive loss caused by the renter – with no deductible. This means you’re not on the hook for damage caused to your vehicle when it’s rented, as it should be.

How to get insurance for renters?

The insurance for you, the renter, is definitely excess (secondary) to your existing liability insurance coverage. RelayRides website states they “add $300,000 of liability coverage on top of whatever existing policy you may already have.” While the wording is vague, it almost sounds like they will offer coverage to you even if you do not already have insurance coverage. We wouldn’t bet on that though, as you typically must have existing insurance to rent a car from any of the standard, “old school” car rental companies.

Let’s face it though; you’re likely renting a car because you don’t already have one. And if you don’t have one, why would you have car insurance?

And if you must have insurance to get into the RelayRides program, you would have to purchase a named non-owner car insurance policy.

Being a renter, you also enjoy physical damage coverage for the vehicle you rent. You get collision and comprehensive coverage. This means any damage that results from your use of the vehicle is covered – with a $500 deductible…so be careful and don’t throw caution to the wind.

[Collision versus comprehensive coverage.]

Don’t forget about Personal Injury Protection and uninsured and underinsured motorist coverage as well. If you get injured in an accident you cause or one caused by someone with little or no car insurance, this policy will cover you up to the applicable policy limits.

What are the potential pitfalls for owners?

There are a few, so pay close attention here and remember to ask these questions prior to signing up.

First, the RelayRides website does not make it clear if their coverage is primary or excess (insurance lingo for secondary) to your personal auto insurance policy. This might be a big deal and here’s why.

Insurance follows the car

If you lend your car to a friend and that friend causes an accident, YOUR insurance is primary, meaning any money paid out for liability claims comes from your policy first, then additional money is coughed up by your friend’s policy (if they have insurance and the damages exceed your coverage).

Either way, primary or excess, you’ve now got a claim on your insurance record for an accident that occurred when you were nowhere near the scene! Your C.L.U.E. report will keep track of this claim for five years and your insurance premiums and eligibility for coverage will be affected.

Second, the policy offers Personal Injury Protection coverage for the renter, passengers in the car, and sometimes even to pedestrians. This means that if the person renting your car (or their friends travelling with them) gets hurt in an accident the renter causes, they can file a PIP claim and get the state minimum PIP coverage for bodily injury.

Why would you care? Well, depending on how their policy works, this will show up as a PIP claim on your insurance. What are the odds? Ask the state of Florida, who is suffering from the highest incidence of PIP fraud in the nation. It is killing insurers and causing extremely high insurance premiums.

How does the scam work? Someone rents your car for $12.00 per hour, drives around the corner and bumps it into a guardrail. Then, they file a claim on your PIP coverage for the “soft tissue” damage they suffered and collect anywhere from $2,500 to “unlimited” dollars depending on the state laws for PIP compensation. Sounds like a good way to make some shady money.

Fourth, RelayRides’ website states that the policy is “sub-limited” to $300,000 per occurrence for the renter. While this may just be a matter of semantics, a policy sub-limit, in insurance terminology, typically means that the total available coverage may be lessened if the sub-limit is used. This means that you would have $1,000,000 coverage – minus $300,000 for the renter’s liability. You end up with only $700,000 total coverage. Sounds like a lot? You may be surprised to find out how much a particular nasty accident can cost.

If there are actually two insurance policies issued (one for the owner and one for the renter), this is not the case…and the language on their website is inaccurate.

Finally, we wonder what happens if your car is “damaged” from something other than a collision or comprehensive loss? Where do cigarette burns on your leather seats come into play here? RelayRides’ website states you “will receive compensation as determined by RelayRides in its reasonable discretion, up to the fair market value of the car.”

Further, they state the renter is responsible for only the $500 deductible, unless they have engaged in any “prohibited uses,” as outlined by their rental agreement. Basically, if the renter screws up your car by using it in a manner that RelayRides deems unacceptable, the renter “may be liable for property damage up to the full value of the car.”

We would like to know if RelayRides helps you get your money in this situation (by paying an attorney) or simply washes their hands of the deal at this point. We’d be pretty upset if someone rented our car for $12.00 and destroyed it, only to be left in the lurch by RelayRides.

At the end of the day, rent your vehicle at your own risk. There seem to be a few different ways you can lose by getting into this program, despite the possible win of extra cash in your pocket.

Update: The New York State Department of Financial Services (DFS) has called the insurance provided by RelayRides via Hudson Insurance Company “illegal and inadequate,” and is widening an investigation of the company.

(photo: dreamsjung)