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Car-sharing app Turo is coming to N.L. — but how does the insurance work?

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Car-sharing app Turo is coming to N.L. — but how does the insurance work?

Turo allows users to rent out their personal vehicles through an online platform, similar to Airbnb. (Steve Bruce/CBC)

Car-sharing app Turo is coming to Newfoundland and Labrador ahead of the potential influx of tourists for Come Home Year this summer, but there are still big questions about the use of the app in the province.

The app is similar to Airbnb but for cars, allowing car owners to put up their own personal vehicle for rent. The service has been up and running in other provinces since 2016.

Provincial government officials tout the app as a solution to the car rental shortages which have plagued the province’s tourism industry in recent years. But, how does it work? And what about insurance?

“Every car has to go through a safety inspection to be listed on the platform,” said Cedric Mathieu, vice-president and head of Canadian operations for Turo. 

“Cars need to be less than 12 years old. They need to have less than 200,000 kilometres on the odometer and be in good mechanical condition.”

Mathieu said car owners can download the app, list their vehicle and set how much they want to charge. As for insurance, Turo is partnered with Economical to be the acting insurance while the rental is taking place.

“Whatever happens during a Turo trip will really be covered by the Turo-provided insurance,” said Mathieu. 

“And your personal insurance is not going to be affected by anything happening on Turo.”

Mathieu said Turo takes a 30 per cent commission from car rental fees and part of that percentage pays for the insurance plan, which he said features “$2 million worth of liability coverage and the full value of the car being protected for physical damage with no deductible for the host.”

In a statement to CBC News, an Economical spokesperson said their partnership with Turo protects the vehicles while they’re being delivered to the renter and while the renter is using the vehicle. Then, when the owner has the vehicle for personal use, the owner will have to again rely on their usual auto insurance coverage. 

“A personal auto insurance policy doesn’t normally provide coverage if the vehicle is rented out,” the spokesperson said. 

“This means that there wouldn’t typically be coverage under your personal auto insurance policy during the delivery and reservation periods. Coverage for the delivery and reservation periods will be provided under the commercial policy issued to Turo by Economical.”

VP and Head of Turo Canada Cedric Mathieu, pictured here in 2016, said the car-sharing app takes a 30 per cent commission to pay for insurance coverage with Economical. (CBC)

Economical said if an accident occurs while the vehicle is rented out, they will provide the owner “with a letter to give to their personal car insurance company to let them know that the claim is being charged to the commercial policy instead.”

However, Economical warned that infractions, like speeding tickets, that happen while the car is rented out could potentially affect the owner’s personal car insurance policy.

While this concept is new to most of the province’s insurance providers, Amanda Dean, vice-president of the Atlantic region for the Insurance Board of Canada, said this form of insurance for car sharing platforms has been working in other provinces for a number of years.

“There is no reason to suppose it will not work in Newfoundland and Labrador, as well,” she said.

“As in any jurisdiction, insurers will make decisions for their own companies on what they can and cannot support in terms of risk.”

Sarah Stoodley, Minister of Digital Government and Service, said anyone who’s thinking of putting their car on Turo should first have a conversation with their own auto insurance provider. (Krissy Holmes/CBC News)

Prior to the announcement last week, Economical had never operated in Newfoundland and Labrador. To gain the ability to conduct business in the province, Economical had to be approved by the Department of Digital Government and Service, which is in charge of regulating insurance matters in Newfoundland and Labrador. 

“They had to provide our superintendent of insurance with a copy of the policy, which we signed off on,” said Minister Sarah Stoodley.

Although Stoodley’s department signed off on Economical operating in the province, she urges anyone who is thinking of putting their car up for rent on the app to first check with their own insurance provider.

“People have their own auto insurance. And any time you do anything that might not be in your policy, it’s important to check with your insurance companies,” she said.

Stoodley said any commercial use of a vehicle should first be approved by people’s personal insurance company.

“Some might allow it, some might not. Some might have to give you a different kind of policy. So it’s really important that if you’re interested in Turo, or any other use of your vehicle outside of the normal kind of intended use of your car, to call your insurance company and have that conversation.”

Many rental car companies are struggling with a shortage of available vehicles, but the provincial government believes Turo could help. (Henrike Wilhelm/CBC)

But Stoodley believes the app should help relieve some of the rental car shortages the province has been experiencing. 

“There’s concerns around transportation, how everyone’s going to get around this summer for Come Home Year. So, we are looking at what options we can help provide to help people get around the province,” she said.

Brenda O’Reilly, the chair of Hospitality NL, shared a similar sentiment. She said potential tourists have cancelled trips to the province over a concern of not being able to rent a vehicle. 

“This seems like a natural fit,” O’Reilly said, referring to Turo’s ability to put more rental cars on the roads.

“Is it perfect? No. It’s new days, it will get better. But the thing is, is that there are a lot of vehicles in this province,” she said.

“[But] this will be everywhere. So if you put your car up in Plum Point or if you put your car up in Labrador for rent, the consumer on the other side can get more access to more cars more readily available in rural parts of the province, which is fantastic.”

Read more from CBC Newfoundland and Labrador

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