A casual look through car renting service Turo yields some pretty sweet and unusual stuff. Why rent a Nissan Sentra at the airport when you can rent some local enthusiast’s Porsche instead? It’s easy to get wrapped up in fantasies of having rare and cool cars to drive for a weekend, but how does the reality insurance for everything work out? What happens if it’s your car up for rent, or you’re renting someone else’s vehicle? I spoke with Turo to find out.

When you rent a car from a more traditional service, like the Avis counter at the airport, you can opt for the rental company’s insurance at additional cost or use your own car insurance, if you have it and it covers any issues you may run into while driving a car that isn’t yours.

But when you use Turo, there are two types of insurance: for the renter and for the owner. Let’s take a look at both.

Owner’s Insurance

As briefly explained in the story about the crashed Audi R8, Turo offers three protection plans for owners who rent their cars out to others.

Liability insurance is provided across all three plans, with a million dollars in liability coverage. Wear and tear, specifically, is defined as any small dings, dents or scratches that are less than three inches in diameter.

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Turo admitted that it’s a bit of a gray area when it comes to maintenance issues, like if a renter takes out a car and some component in the engine fails while they have it. Owners should be keeping up with their due diligence with their cars, but sometimes failures happen.

“If there’s an engine failure, and it’s something that’s caused by a mechanical failure and not something that the renter could have caused by using the vehicle,” Turo senior claims manager Chris Aragon told me, “that’s something that is not covered by us. That’s something that’s just a mechanical breakdown that you’d be expected to pay for.”

Which makes sense—your own car insurance isn’t responsible for a bad alternator. If it is something breaks from abuse and not from normal wear and tear, Turo said that it will determine the cause.

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Should an owner choose the Premium or Standard plans, Turo has waived the deductible requirement. By contrast, personal insurance companies often require people to sign up for a deductible that’s typically between $500 and $1,000.

Car owners looking to rent on Turo can opt out of a Turo insurance plan only if they have commercial insurance that they could provide themselves. This is geared to people who are renting as part of a professional business, however.

In terms of actual payments themselves, Turo will pay the full repair cost up to the cash value of the car, or a limit of $125,000 (it used to be $75,000, but Turo raised it recently so people would be more incentivized to add higher value cars). Owners are also free to take their cars to whichever repair shop they’d like.

Turo determines a car’s Actual Cash Value through a third party administrator, the Littleton Group, which uses a network of independent appraisers called AutoClaims Direct. They will send an appraiser out to do a visual examination and take photos. The appraiser will document the car’s condition, mileage or anything else that would help determine the actual value of the car itself.

Then, they use a software which basically does a market sweep of as many comparable cars as it can for the car that was actually totaled. “Once that’s finished,” Aragon said, “the system will, based on the appraiser’s rating, either increase the value if the mileage is lower than the comparable vehicles that they found, or decrease it if the mileage is higher.”

He added that in regards to condition, if the quality of the comparable cars are dealer ready and the lost vehicle is not, then some depreciation aspects will be factored in.

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It also works in the reverse. If the car in question is in dealer ready condition but the comparable cars are not, then a positive increase in the total loss valuation is also possible.

It should also be noted that state departments of insurance do not recognize sites like Kelley Blue Book or Edmunds when it comes to determining the car’s value, as those sites exist primarily for buying and not insurance purposes.

In terms of paying for the insurance, Turo will take the portion of the insurance price from the owner’s rental earnings once the car is booked the reservation goes through.

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For example, if an owner lists their car for $100 a day and rents their car out on the standard plan, they would make $75 a day off of the $100 that it’s listed for. Owners are free to manage their own prices accordingly.

Renter’s Insurance

Similarly to owner’s insurance, people who rent the cars have three plans to choose from when renting from Turo. The full article on Turo’s website can be found here, but here’s the meat of it:

  • “Premium” Package: The renter’s out-of-pocket exposure is limited to payment of a deductible of $500. When damage is reported, the renter will be charged $500, and if the total costs (direct costs of damage, plus all “Related Costs”, as defined below) are less than $500, the renter will be refunded the difference.
  • “Basic” Package: The renter’s out-of-pocket exposure is limited to a payment of a deductible of $3000, under the same structure described in the Premium package.
  • “Decline Coverage” Package: The renter’s financial responsibility is essentially unlimited, and is bounded only by the actual cash value of the car, plus all Related Costs. This means that if the car is lost, stolen, or damaged so extensively that the expected cost of repairs exceeds 75% of the actual cash value, the renter is responsible to pay the entire actual cash value of the car, plus all Related Costs, minus any residual salvage value.

Renters have the option to decline the insurance because many people already have personal insurance policies that will cover them when they are renting or borrowing a car, much like when you rent at the airport but don’t need Hertz’s insurance because you have your own. The Basic Package is an additional 15 percent of the rental price and the Premium Package is 40.

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The Premium Package also protects a renter with a million dollars in liability coverage. The Basic and Decline Packages protect renters with the state minimum liability coverage.

Turo’s Premium insurance does have an advantage, though. Personal auto insurance companies will charge people a deductible per event. The Premium Package limits multiple accidents to just the one $500 deductible, which applies for the entire trip, no matter what happens to the car. So if you’re super unlucky and get into two accidents while you’re renting, you only have to pay one deductible.

Turo encourages people who select “Decline Coverage” to check with their insurance and credit card companies before assuming that they are covered, as it is “highly unlikely” that they would be covered when renting through Turo.

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If during the rental the inside of the car is damaged or if there is any mechanical damaged outside of normal wear and tear, the renter is liable for the full cost of the repairs or replacement and any related costs. It’s probably a good idea at this point to discourage you from unleashing your herd of wildebeest in a Turo car.

Turo’s protection is secondary, which means that:

The Premium and Basic packages are “supplemental” or “secondary” to any existing coverage the renter may have available through other sources (whether through a credit card, personal automobile, or other policy). In practice, this means that the renter is primarily liable, but can satisfy their obligations through these other sources, such that Turo will first collect the relevant deductible directly from the renter, and then will seek reimbursement (“subrogation” in insurance terms) from the renter’s other sources for the total amount of liability.

Similarly to other rental agencies, there is a young driver fee for those younger than 25. Sorry, kids.

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If all of this seemed very dry to you, it’s because it is! Car insurance is very dry stuff! But, it’s a necessary thing to learn to navigate and understand because it affects all of us.

Because car insurance is so dense, it’s hard to fully understand the ins and outs of it without actually sitting down to figure it out. Though discrepancies sometimes arise with people renting with Turo, reading through the company policies helps to educate people on insurance in general.

And if it’s still confusing, it’s also a good idea to call and ask. Most companies have representatives who will happily chat through their policies with you. Because, as you know, an ounce of prevention and all that. Don’t get stuck in the event of an accident and then find that you aren’t covered like you thought you were.

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Clarification: Renters that choose to “Decline Coverage” are encouraged to check with their insurance and credit card companies beforehand because though a credit card company likely won’t cover them, their personal insurance will in most cases.