How Smart is it to Rent Out Your Car? (Part Two)

The coverage provided by the company to rent out your car may not be adequate for major damages done to your vehicle.

Making sure your vehicle is protected enough is important if you are going to rent it out.

In the first part of this article, we covered a few of the problems you may face if you choose to rent out your car. In this part, we cover the insurance coverage that is offered by the renting company, through an unnamed insurance company, for the owners and the renters of the program.

Insurance for Renting Out Your Car

The companies that set up the rental transactions for you claim to have insurance coverage they provide on the vehicles. Be very careful though! While these insurance policies do have high limits for liability coverage, that is for the people that are hit by your vehicle.

The coverage for your vehicle is not the same. This is the explanation of coverage from the company RelayRides:

“If the car is damaged during the reservation period, the owner is fully protected against the property damage to the car, and will receive compensation as determined by RelayRides in its reasonable discretion, up to the fair market value of the car. The renter is responsible for only the $500 deductible, unless they have engaged in any Prohibited Uses, in which case this limit will not apply, and they may be liable for property damage up to the full value of the car.”

Please note 3 things about the above paragraph if you decide to rent out your car with them:

• The owner will “receive compensation as determined by RelayRides in its reasonable discretion, up to the fair market value of the car”. In other words, if you have a vehicle that is paid for, but is only worth $5,000, the company will pay you the $5,000. This leaves you having to find a new vehicle for that amount, or using it as a down payment on a new vehicle that you will now get to make monthly payments on again.
• “The renter is responsible for only the $500 deductible”. What happens if they don’t pay the $500? Are you stuck with paying it on repairs to your vehicle or are you stiffed the amount when the company sends you the check for the fair market value of the vehicle?
• “Unless they have engaged in any Prohibited Uses, in which case this limit will not apply, and they may be liable for property damage up to the full value of the car”. Does this mean they will be paying the insurance company back for the damages they pay you for your vehicle, or does it mean the driver has to pay you, because the insurance company isn’t going to pay now?

Please, please, please be wary before you decide to participate in any program like this. If you do decide to do this, you need to talk to your insurance agent and ask the company you will be renting out your car through a whole lot of questions.