In the last decade, the idea of sharing — and monetizing — the things you’re not using has gained traction at lightning speed, and that’s thanks in large part to technology. It seems like everyone has some sort of side-hustle these days. Have an empty guest room? Airbnb can help you rent it out. Got a car and a few extra hours on the weekend? Uber and Lyft are happy to match you up with a rider.
When you combine this rise in new money-making opportunities with the fact that the average car spends 95 percent of its life sitting in a parking spot, it’s not surprising that app-based marketplaces like Getaround and Turo have cropped up to offer car owners a new way to make a few dollars on the side. These services are referred to as peer-to-peer (P2P) car-sharing, and they’re posing some serious competition to the traditional car rental model.
If you’re looking to take full advantage of the sharing economy by listing your car on a rental marketplace, there are a few things you should think about first.
How Do I Choose a Marketplace?
Some P2P apps advertise that listing your car could earn you up to $ 10,000 a year. Others say you can make $ 1,000 per month. So how do you decide which marketplace you should list your car in, and how do you sign up?
First, you’ll need to figure out which services operate in your area — currently, the biggest P2P marketplaces are concentrated in major urban centers. Then, simply go online and enter your vehicle details and personal info to get an estimated hourly rental rate for your vehicle.
Rates vary depending on the age, make and model of your car, so check around to see who will pay you the most for renting out your ride. Keep in mind that some services also adjust rates on a daily basis (similar to a rental car agency), so the amount you make may depend on when your vehicle is available.
Finally, you should consider how much insurance each provider offers to protect your vehicle in case a renter has an accident — which brings us to our next point.
How Does Insurance Work?
Most of the well-known P2P car rental marketplaces include varying levels of insurance to protect your car and your liability when your car is rented out. Before you list your car on one of these services, do your research to find out which one provides the best coverage.
Keep in mind that your personal car insurance policy will not provide any coverage while your car is being rented out. That means they won’t pay for any injuries or damage the renters cause, whether to your car or anyone else. What’s more, if your car is parked and waiting for a renter to pick it up, your personal coverage may not cover you if someone hits it, or if it’s stolen.
Even more importantly, before you go all in on P2P marketplace rentals, you should check with your current insurer to see whether doing so will affect your existing policy. They may have concerns that the extra wear and tear on your car could increase your accident risk, or that your P2P insurance may not provide sufficient coverage and you may seek coverage from them. There are many factors that could affect your level of risk, so checking with your insurer before listing your car is a must.
Who Pays for Gas?
This one’s actually a little less complicated. If you aren’t driving, you shouldn’t be paying for gas. Typically, the renter is responsible for returning the car to you at the same fuel level they drove away with. But pro tip: If you fill it up to the top before they rent, it’s a little easier to tell if they did their part.
Before someone rents your car, be sure to take a photo of your fuel gauge. That way, if they return your car without replacing your gas, you’ll be able to file a dispute with the sharing service, who will typically charge the renter a fee for the gas (and the inconvenience).
Can I Control Who I Rent to?
As the owner, who you rent your car to is your choice. The most popular apps will allow the renter to put in a request for a date, time and duration that they’d like to rent your car. Then it’s up to you whether you’d like to rent to them or not. You don’t have to rent to anyone you don’t want to.
The moral of the story is, if you have a car that spends most of its time sitting in your garage or parked in front of your office, putting it to work for you could help you make a little extra income on the side … and who doesn’t like that? Just make sure to do some research beforehand so you’re not met with any surprises.
Eric Madia is Vice President of Product Design at Esurance, where he is responsible for designing the company’s personal lines products. Eric has 23 years of experience in the industry. He writes on all things car insurance, including what to know before signing up for a car-sharing service. Learn more about auo insurance from Esurance at Esurance.com.
This blog post does not constitute, and should not be considered a substitute for legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.
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