Peer to Peer Car Rental: A Peek Into a Growing Industry

Antoine and Roslyn Andrade* are living the “American Dream.” You know, the one where you have 9-5 jobs, run a ministry AND manage a start-up peer to peer car rental business on the side. All the while, this husband/wife duo are putting THREE kids through college.

“We tapped into our kid’s college savings to buy the first three cars,”  Roslyn said about how they were able to start this home-based business. “We try to maintain multiple sources of income. If one goes down, then you have the others.”

Like many others in this business, they are utilizing popular peer to peer car sharing apps such as Turo and HyreCar. Turo, is a peer to peer car-sharing app which started in 2010 and focuses solely on personal use. While HyreCar, which first launched in 2014 – focuses on renting solely to drivers who are using the cars to drive for Uber & Lyft.  Antoine and Roslyn utilize American Business Insurance’s (ABI’s) Period X™ insurance product which was created for the peer to peer car sharing business model. As part of this insurance product, which insures the cars only while they are not rented, they are provided a CarTeq™ device which plugs into the OBD port of their vehicle. Through this device, they can log into our portal to view vehicle trip history and GPS location.

Testing the Peer to Peer Car Rental Model

Antoine and Roslyn listed their first 3 cars on the above platforms in 2018. Since then, they have utilized the profits they have made to invest

back into the business and grow their fleet to 15 cars. As you can imagine, balancing their day jobs along with managing a mini car rental business is challenging.

From scheduling maintenance, filing claims, repairing and even recovering stolen vehicles – the business is one that should be carefully entered. It’s not unusual for cars to come back from being rented needing repairs. And some don’t come back at all, and need to be tracked down or reported as stolen.

Antoine and Roslyn had more than once instance of this happening but were able to recover the vehicles in both instances. “The first time, we had to use the police to find the vehicle. The second time, we were able to get the address the car was parked at through the ABI portal. When we arrived, the car was still parked there so we took it home!”

Peer to Peer Car Rental Made Easy

Jon J. in Atlanta, GA has a clean, methodical approach to growing his peer to peer car rental business. Jon, who also has a day job has always had an entrepreneurial spirit. He uses his background as a consultant for other businesses to grow the car-sharing model.

Some people are in the business to recoup costs on a vehicle they want to own, but not use all the time. An example of this is the business executive who wants to buy a Tesla, and then lists it on Turo to rent out a few days out of the month to offset his own monthly cost of using it when he wants.

Taking Care of Business

Jon on the other hand is focusing on how to get them continually rented while automating the process. Like the Andrades, he also started with 3 cars and is up to 15 within a year and a half of utilizing ABI’s Period X™ insurance product.

His fleet is made up of vehicles that are easier to maintain and good on gas. Some of the cars in his fleet include the Nissan Versa, Hyundai Elantra and the Ford Focus and Fiesta. “It’s all about getting the cars rented frequently and at the right price point.”

As a current business traveler, he is used to renting cars for work travel. In the past, he would always go to the big-name agencies like Hertz or Enterprise. When there was a problem, he had to deal with a giant corporation or a call center in a country far away.

“People like being able to call us directly, instead of a big company,” Jon said.

Let’s Get Personal

While using one of the online apps such as Turo or Getaround might seem like an impersonal experience, Jon said it is exactly the opposite. “With these apps, you get to see who owns the car in advance, the exact car you are renting and reviews of the person who is renting to you. You can chat in real time if there is a problem and it’s a much more personalized experience,” Jon continued.

Besides also having to recover stolen vehicles, Jon explained some of the other challenges he faces in the industry. Some of these challenges include knowing everything you can about what you are getting into, expecting the unexpected (maintenance, repair, paying deductibles on claims, etc) and always maintaining a reserve fund equal to about $1,000 per car ($10-$20k for a fleet of 15).

And that doesn’t include the cost of insurance. “There are some nuances on the insurance piece of the business. Initially, I used my personal auto insurance. But as it expanded, I needed a more scalable model. ABI really helped there,” Jon explained.

Risky Business

Personal auto carriers do not allow for you to insure cars that are being used to generate any type of revenue. Many people enter the peer to peer car sharing space utilizing only their personal auto. However, if a claim or accident were to arise through the course of business or even outside of it and they find out – you risk the claim being denied and possibly your policy being cancelled.

“Before you jump in, understand the true cost. Don’t just dive in without testing it. Test with 1-3 cars. Understand the risks you have to assume going into the peer to peer marketplace. Have patience and think through the little thing’s others don’t think about. Every few months I look through my business plan and identify what should be changed going forward. That’s really how you establish rapport and grow a business.”

*Note: Some of the names above are changed or abbreviated as the people interviewed prefer to maintain anonymity.