The importance of liability insurance and a note regarding Turo

When we think about car insurance, usually we’re thinking about potential damage to our car. Insurance has another, arguable more important, function though: coverage in case of third party liability. In other words, if you injure or otherwise harm someone else while driving, it’s possible you could open yourself up to significant liability for their medical expenses, loss of income, and other damages.

As it happens, I actually served on a jury recently where a man had been injured in a relatively minor collision. However, he suffered a lifelong neck injury, and was ultimately awarded over a million dollars in damages largely due to lost future income. Without insurance, the other driver would have been personally liable for that amount.

So, unless you have a few million dollars to spare, having third party liability coverage is essential. Most states and provinces mandate a certain amount of liability coverage, but the required minimums are usually quite low—ranging from a few tens to hundreds of thousands. Personally I would be uncomfortable carrying “only” a few hundred thousand dollars of coverage for something that could cause easily run into the millions.

Fortunately, since these incidents are rare, liability insurance tends to be fairly inexpensive. It varies by location, insurance company, and other factors, but it’s possible to get several million dollars of third party liability coverage in most cases for under a couple of hundred dollars per year. If you own several vehicles, you might also consider “umbrella liability insurance”, which can top up your regular auto policies, and can be more cost effective than adding additional liability coverage to each policy separately.

The Turo problem

Many auto insurance policies will continue to cover you when you rent a car. Also, many travel rewards credit cards will also provide rental vehicle insurance with liability coverage. However, nearly all credit cards and many auto insurance policies do not extend coverage to car share rentals, like Turo.

Fortunately Turo provides their own insurance to hosts (the people renting out their cars) and guests (the renters). Unfortunately, the liability coverage offered by Turo to guests/drivers is woefully inadequate. While hosts receive $1M in coverage, guests are normally only covered up to the state’s minimum required level. As mentioned above, in most cases this level is indeed minimal.

Turo advertises a “Premier” coverage plan as an option for guests, but for some reason this coverage is only offered when the vehicle rented has a value of less than $25,000. I contacted Turo to ask why liability coverage is only available for drivers of inexpensive vehicles, a policy which on its face makes no sense, but unfortunately I was unable to get a response beyond a repetition of that policy. For those interested, the full policy can be found here. While I can see why Turo would want to limit the damage coverage they offer on expensive vehicles, I can see no logical reason why they wouldn’t offer enhanced liability coverage, at least as an option, to all drivers.

I love the idea of Turo. We’re all car enthusiasts here at AutoTempest, and when I travel I would love the opportunity to rent something more interesting than the Malibus and Impalas and such from Avis and Enterprise. But unless Turo changes this policy, I can’t see myself rolling the dice on a rental without sufficient liability coverage. However low the risk of needing it, when the potential consequences are bankruptcy, it’s just not worth it.

If I do hear back from Turo with more information, I will update this post.

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