Turo car sharing is the hidden opportunity most insurance agents don’t think about, but should. Here’s how your agency can adapt to the sharing economy.
“We don’t have anything available for you right now, but we can refer you to our partners. There’s a free shuttle that will drive you over there.”
My husband and I were standing in a car rental agency with our toddler. We had just gotten off a dreamy two and a half hour train ride down the California coast on the Pacific Surfliner, and we needed a rental car. Unfortunately, the well-known rental car company that we were at didn’t have any available vehicles. They suggested we take a shuttle to one of their referral partners, who happened to have an available car.
This is our lucky day!
At least, that’s what I thought… until I saw the other rental car company. It looked like a run-down auto center with a small office attached. My worry only increased when we were shown inside the office and were subsequently ignored by the staff, two overly tan men chatting with each other and noisily eating large gyro sandwiches wrapped in foil.
We still went ahead with the rental and had a lovely vacation. However, I made sure to save the receipt from the rental. One year later, while reviewing our bank statements, I saw a surprise $250 charge from… you guessed it. That car rental agency. I quickly called my bank and disputed the charge, and after an investigation, we got our money back.
Turns out that this is a trick the rental agency often plays on its unsuspecting customers, charging them ridiculous sums of money long after the rental has been returned. They claim the charges are for traffic violations, like running a red light, but the company is never able to produce the actual violation as evidence.
We were fortunate that our bank helped us recover our money, but we learned our lesson. The next time we traveled to San Diego, we downloaded Turo.
Have you heard of the Turo car sharing app? It’s like Airbnb but for cars. The peer-to-peer car rental app founded in 2010 has grown tremendously in the past 10 years. Turo claims that right now, it has over 10 million users and more than 350,000 vehicles available to rent.
The sharing economy has truly exploded. People love being able to profit from possessions that they’re not currently using, whether that be their home, their car, or even their time. As an insurance agent, right now is a great time to take advantage of the sharing economy. This is your opportunity to cross-sell and upsell insurance policies! So what should you know about Turo car sharing?
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How does Turo insurance work?
Turo currently offers its owners and renters third-party liability insurance from Liberty Mutual, which Turo obtains from a policy through the Turo Insurance Agency, LLC. This insurance is available to all owners who operate in the U.S., UK, Germany, and certain provinces in Canada. Anybody who works outside of these countries and provinces must provide their own commercial rental insurance for their customers.
For Car Owners
Turo’s liability insurance makes the most sense for car owners to have since getting their own commercial auto insurance could be expensive (although a savvy insurance agent could see an opportunity to supplement Turo’s insurance policies). All levels of Turo’s insurance provide up to $1,000,000 in third party liability insurance.
The three owner protection plans are known as Premium, Standard, and Basic. Here’s a breakdown of each option below:
Many hosts are interested in just the Basic plan because with this plan the host can keep 85% of the profit they make off of a trip. Under the Standard and Premium plans, the owner keeps 70% and 65%, respectively. With the Basic, however, the only costs covered by insurance are necessary repair costs. Turo will pay 20% of the first $3,750 for the uninsured cost of repair, then 100% of the costs afterward up to the value of the vehicle or $125,000. Owners who have the Basic plan are responsible for replacement vehicle reimbursement costs, exterior wear and tear coverage, and loss of hosting income.
With Standard, hosts keep a little less money from each trip, only 70%. However, Turo will pay 100% of the uninsured cost of repair up to the value of the vehicle or $125,000. With this option also, Turo will pay for replacement vehicle reimbursement costs up to $30 a day for 10 days. The owner still has to cover exterior wear and tear coverage and loss of hosting income.
Hosts keep the least amount of money made from each trip when they have Premium, only 65%. Similar to the Standard version, Turo will pay 100% of the uninsured cost of repair up to the value of the vehicle or $125,000. They also provide the same replacement vehicle reimbursement costs. However, in this version, Turo is also responsible for exterior wear & tear coverage and loss of hosting income.
Car hosts have the option to waive coverage, but they would have to purchase commercial auto insurance, which may be more pricey. The Premium option is obviously the most attractive to its car hosts because they still make a profit and can keep their additional stream of income in case their renter temporarily puts one of their vehicles out of commission.
Turo car sharing renters don’t need their own personal insurance coverage if they use one of Turo’s protection plans. If guests have their own insurance that covers rental cars, Turo’s protection plans will supplement that insurance, especially since personal auto insurance might not fully cover them when renting on Turo. Guests have 3 protection plan options available through Turo:
The first option is the Minimum plan. This plan provides the minimum liability coverage required by the state where the car is rented. There’s also a $3,000 deductible and there’s physical damage protection.
The Standard plan is the same as the Minimum plan except that there’s only a $500 deductible.
The Premier plan comes with liability coverage up to $1,000,000 and a $0 deductible.
With any of the above protection plans, guests are liable for any interior or mechanical damages. Provided that the guests are over 20 years old, they can also decline coverage and use their own personal insurance as long as it provides the minimum amount of coverage for the state they’re renting the car in. With this option, the guest is still liable for any physical damage that happens to the car.
An Opportunity for Insurance Agents
It can be difficult for renters to find personal auto insurance that also covers their use of rental cars. And apps like Turo aren’t always clear about who takes primary responsibility in a car accident. Greg Scott, the government relations representative for the American Car Rental Association (ACRA), likened peer-to-peer rental car accidents to the wild west since car insurance requirements differ in each state. While this issue has already been answered in regular rental car transactions, the solution in peer-to-peer car rentals is murkier.
Most people don’t realize that they need three specific types of coverage (liability, collision, and comprehensive) to cover themselves when they rent a car. Liability insurance is necessary because it covers damage to other vehicles and injuries. Collision insurance covers damages to the rental car from an accident. And comprehensive insurance covers vandalism or theft.
Right now insurance agents have a major opportunity to sell additional coverage to their clients who rent cars through companies like Turo. When you perform a review of coverage with your clients, ask them about extending their coverage to rental cars. Or, this could be a selling point for potential clients who like to travel and rent cars often.
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My own personal experience using the Turo car sharing app was incredibly easy. We looked for car owners with a high approval rating and then chose to rent a 2019 Toyota Rav4, a car we were interested in test driving. The owner left the vehicle in the airport parking lot. As soon as we got off the plane, our vehicle was waiting for us, no questionable rental agency and no surprise charges in sight. The peer-to-peer car rental industry is only destined to grow, so as an insurance agent, now is the right time to adapt and consider coverage options for your adventurous clients.