Never heard of either business? Let’s review the history, because — as mixed as it is — they’re still in business and continue to attract investments from the likes of Kleiner Perkins and Toyota. And even after crashes, some car owners put their vehicles right back up for rent once they come back from the body shop.
In 2012, I wrote a column in which a number of insurance companies expressed deep skepticism about customers putting their cars into a rental pool. In that article, I quoted a statement from RelayRides in which the company said it had been operating successfully in Massachusetts even without any legislation — like the kind that exists in California, Oregon and Washington — that would generally keep insurers from dropping your personal coverage as punishment for putting your car up for rent. Those Massachusetts operations had gone on for two years “without any problems” relating to lost insurance, RelayRides said.
Except there was already a problem in the state that the company did not tell me about at the time: a fatal accident that killed the man who rented a car and turned into an insurance nightmare for the vehicle’s owner. In a follow-up column, I told the story of Liz Fong-Jones, who had put her car up for rent, and the four people who were injured when their vehicle was struck by the man who had rented the car (and who died). The subsequent lawsuits and claims threatened to eclipse the $1 million in liability coverage that RelayRides provides people who put their cars on the platform. (Getaround has a similar insurance policy.)
Eventually, all of the legal cases settled without breaching the $1 million barrier, though the lawyers I reached this week said that the terms of the agreements kept them from saying much. In late 2013, RelayRides published a blog post making the case that its insurance is actually better than what most people buy for themselves.
Earlier that year, however, the New York State Department of Financial Services published a “Scam Alert” warning people away from the company. In a consent order, the Financial Frauds and Consumer Protection Division said that RelayRides had acted as an unlicensed insurance adjuster and producer, misrepresented the coverage it provided and most likely led many people to violate their leasing and finance agreements. The company no longer does business in New York, and Getaround does not have cars in the state either.
Credit
Ryan Root
RelayRides changed its name to Turo in 2015. Today it claims nearly 150,000 cars on its platform, which includes many vehicles at airports, though it declined to describe how active those owners are. Getaround would not disclose exact numbers, except to say that there are thousands of cars in its major urban markets. It counts owners who have made their cars available in the past month.
That’s not nothing, but putting your car in a rental pool is clearly far from a reflex for the vast majority of people. Some of this is practical, since if you commute each day, it may not be easy for a renter to get to your car when you’re at the office. On the weekends, most people want flexibility for leisure, errands and family rides. Also, while homeowners have been taking in boarders for centuries, the possibility of effectively turning your vehicle into a Zipcar wouldn’t have occurred to most people until the first Zipcar appeared in 2000.
A search of the internet and court filings suggests some other potential problems. In the comments on a first-person blog post on Travel Codex about car theft and Turo, I found Ryan Root. He put a Jaguar on the Turo platform last year, and told me in an interview that it was damaged three times (and totaled once) during 29 rentals in Bayonne, N.J.
Because of “limited availability,” said a Turo spokesman, Steve Webb, no one was available to talk to me on the phone. He said via email that less than 1 percent of Turo rentals result in damage.
One of Turo’s own insurance partners filed suit in federal court last year over another death. In that instance, a Turo vehicle struck another car and killed its driver in Smyrna, Ga. Brian Lewis, a lawyer representing a passenger in the Turo vehicle, said that the Turo renter was not the person actually behind the wheel, and that the suit would resolve the question of whether Turo’s insurance ought to cover that situation. (The lawyers for the insurance company did not respond to a request for comment.)
In an email, Mr. Webb said that the Turo vehicle in the Smyrna accident had been stolen, that the insurance company does not believe it owes coverage to a criminal, and that the coverage would indeed protect the car owner. He declined to provide overall theft figures, though he did say that it was “extraordinarily rare.”
A spokeswoman for Getaround, Jacqueline Tanzella, said that its rate of recovered cars from in-trip thefts was 100 percent.
Given all of the above, why would anyone want to risk putting a car on these platforms? According to Turo, the money can be irresistible, especially for Tesla and other owners who might otherwise not be able to afford the vehicle. Tesla itself is looking to help its owners rent out their cars through what it refers to as a “shared fleet.” Getaround allows owners to funnel their rental revenue directly to Lexus and Mercedes-Benz to cover their own payments.
Even Mr. Root is willing to give Turo a fourth chance if he replaces his car after the three accidents. While he found the company difficult to deal with after the damage occurred, he was often making twice as much from renting it out as the car cost in monthly lease payments, at least until it was totaled.
“I’m a businessman, and I want to leverage my assets and generate income from as many sources as possible,” he said. “The concept and platform is ingenious, and when it’s working, it works well.”
Ms. Fong-Jones told a similar story when I talked with her in 2012 about her replacement car. Continuing to rent out her idle vehicle — even after the fatal accident — was environmentally responsible, she said. It could also help fellow dog owners who had trouble finding car rentals because of no-pet clauses. She was named in multiple lawsuits relating to the accident, however, and her insurance company dropped her.
Ms. Fong-Jones no longer owns a car, but before she let her last one go, she yanked it from the rental pool after all. It was no longer there, she reported via Google+ in 2015, “on advice of my attorney.”
