RelayRides Insurance Review: A Word of Caution

November 5, 2012 2 Comments »
RelayRides Insurance Review: A Word of Caution

“RelayRides” is a nationwide car sharing network where individuals can “rent” their own cars to others in exchange for a fee.

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.

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.

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.

[How much do insurers spend on advertising?]

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

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.

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.

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)

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  1. John March 18, 2015 at 3:07 pm -

    My vehicle was in a 4-car pile-up caused by the person driving my vehicle while renting it. RelayRides does NOT provide coverage for the diminished value of the vehicle. In case you don’t understand what that means: after your vehicle is in an accident, that fact is recorded in public records that shows-up on a Carfax report. When someone wishes to purchase your vehicle and looks at the Carfax report, the value of the vehicle is automatically lower than it was prior to the accident. The only place RelayRides publicizes that they do not provide this coverage is in their FAQ. They advertise $1-Million of insurance for your car on their website, making someone feel very comfortable about renting out their car via this service. Insurance companies reimburse for this. In fact, there was a lawsuit in Washington where Farmer’s insurance had to pay for this just a few years ago. I’ve really been a big fan of RelayRides until now. The process for getting my vehicle repaired wasn’t exactly a cake-walk either.

  2. Charmian L. August 13, 2015 at 9:06 pm -

    Relayrides and their owner have really horrible services. May be not all of the owner are bad. The owner let us go and sign the sign out paper with no issue. However, the owner sent us a pic of scratches on bumper in the next day morning and charge $850 for fixing bumper. But we return the car in same condition as we pick up. Full tank gas and car washed. I ask another body shop for quote , the maximum price is $650. But we find out there is suspicious. We check the car once before return and we park the car in safety place, no bricks…no curb. When we arrive at the return location, it is a parking lot from the car owner apartment. We parked at the guest parking and we did back parking, the paint on the ground and curb are green. The pic from the owner is showing the car was moved and park at different location in front parking after we leave and the paint on the scratch is red. We all are not angry and we talk to the owner politely, but the owner are so rude and frighten us. And now the owner and relayrides ask for $11xx.xx. it is so ridiculous. From the first min until now…we don’t have any chance to explain and objection. In Addition, the scratches on bumper is so obviously, the owner must see the scratches when he checked the car. If we did the scratches, we would like to tell the owner at first time. Plus no one know wt happen in between from we returned the car until owner found the scratches. We all gave a serious thinking , we didn’t scratched the car and we did back parking all the time in the trip, it is impossible to scratch the bumper. Relayrides is more goes to the car owner and benefit them, it is unfair to the renter cause they have a policy for the owner that if they found any car problem such as scratches, they can report to relayrides and ask for money from renter, plus they can charge the money from renter’s credit card without any investigation and permissions. Now I need to give all of u a serious advice that if u wanna rent a car from relayrides, please stop or think twice.

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