I have been trying to work on my public speaking skills and agreed to lecture at a conference for medical assistants today. It was located about 40 miles away in the middle of nowhere, requiring me to rent a car. I was debating which company to use to rent my car from and in the process learned some very interesting things about car sharing insurance.
Car sharing insurance coverage leaves a lot to be desired. Not only is there very little transparency but the auto insurance coverage that’s provided is inadequate.
4 Car Rental Options
I have an Enterprise car rental near me and I can pick up a Car2go or ReachNow car anywhere they are parked – these are plentiful.
Finally, I have the option of a Turo auto rental which is a peer-to-peer car sharing service.
1. Enterprise
I have an MD degree and I have no fucking idea what I am covered for and for how much. Despite doing my research online and reading their website I am none the wiser.
Transparency is obviously not Enterprise’s strong-suit. Way too many vague descriptions and unfamiliar terms to make any sense of it.
2. Turo
Turo has a ton of information regarding insurance but it’s scattered on multiple pages on their site. I landed on this page which mentioned a covered of up to $1M – but that’s only with the a Premium Plan.
Apparently there are 3 different levels of insurance that I can choose from when I first rent a car: 1) Premium, 2) Basic, and 3) No Coverage. Too complicated.
3. ReachNow
Not only does ReachNow car sharing service have poor reviews in Portland but their Help Page has no information regarding insurance.
I couldn’t find this information on any other page either.
4. Car2go
Car2go will offer you the minimum coverage your state requires. You can look up your state’s insurance requirements on this site. Car2go had the easiest website as far as finding out my insurance coverage information. And it was easy to understand.
Oregon requires a liability coverage of 20/50/20 and some coverage for uninsured motorists. Let’s delve into the different types of auto insurance.
Car Insurance Basics
This stuff is as dull as politics but I’ll summarize the various types of auto insurance. There are 4 basic types.
1. Liability
Liability coverage is needed when you crash into another car and you are at fault. It’s divided up into 3 numbers often reported consecutively, 25/50/20.
(Individual bodily injury)/(total bodily injury of occupants)/(property damage).
That’s $25k per individual bodily injury and/or a total of $50k for all individuals you’ve harmed.
The final number is $20k of coverage for any property damage. Remember, you might hit another car but you might hit a building or a $250,000 park fountain.
2. Comprehensive & Collision
Comprehensive pays you for the value of your car if your car gets stolen or gets blown up by terrorists.
Collision pays for damages to your car even if you were at fault or someone else was at fault but wasn’t injured. These 2 are often required by the bank if you are leasing your car or financing it.
3. Uninsured/Underinsured
If you are in a car accident and the other party is at fault but doesn’t have enough insurance or no insurance at all to cover your bodily injury or property injury then you’re stuck with the bill.
4. Personal Injury Protection
This is coverage for the driver. If you get bodily harm during the accident then your insurance would cover you depending on your coverage limits.
Most of us physicians have our own health insurance so we don’t need this kind of insurance through our auto policy.
Physicians & Car Insurance
Most physicians own their own car so even if they rent a car or use a car sharing service their primary car insurance will cover them. But are you adequately protected with your own car insurance? It’s something worth discussing with your financial adviser.
Negative Net Worth
If I have student loan debts of $450,000 and a net worth of -$250,000 then I’m not terribly worried about getting sued. With a negative net worth there isn’t a whole lot of risk that I would be exposing myself to.
Lawsuit
Still, having to deal with a lawsuit is nothing pleasant. If you damage a $100k Tesla and only had $50,000 of liability insurance to cover property damage then you likely will be sued for the other $50,000.
13% of motorists in my state don’t have car insurance. A higher portion have too little insurance, aka, underinsured.
My Car Rental For The Day
I ended up using Car2go and used it for a total of 6 hours. The rental cost was $80.00 which included gas and 150 miles.
I spent the trip thinking about car insurance, risk, and coverage.
As I am writing this post I am realizing that my coverage with Car2go is too anemic. I would be covered for the state’s minimum requirements which I outlined above – 25/50/20 – $25,000/$50,000/$20,000.
If I hit one of these Tesla’s on the road or the occasional Range Rover then what’s $20,000 gonna do for me? It would be just enough to pay for their gold-embroidered vanity plate.
My Personal Risk
It’s great that I have worked hard and saved diligently. It’s wonderful that I have been fortunate with my investments to see a sizable appreciation.
Putting all this at risk because of inadequate car insurance coverage would be laughable. But the problem is that many years of frugality have me on occasion being too cheap to pay for value.
Solution: Non-Owner Policy Auto Insurance
I encourage any young physician to not own a car and even after you’ve won the financial lottery with financial independence it’s delightful not having to worry about a vehicle.
But, you might need to borrow a car from time to time. Whether you borrow a friend’s car, your mom’s car, an Enterprise car, or one of the many car sharing services, it’s worthwhile to have your own insurance policy.
This is especially important once your net worth is something worth bragging about. Your risk is far higher and a good lawyer will find out what your net worth is before deciding to come after you.
Non-Owner Policy
A non-owner policy is no different from a regular car insurance policy except that no individual vehicle is attached to it. In fact, it’s slightly cheaper than what you’d pay for your regular car insurance.
A rough estimate is that you’ll pay about $1,200/year or $100/month for such a policy. This might seem like a lot but imagine that if you rent a car even 4x a year for a total of 10-15 days then you could easily pay $30/day for insurance coverage.
Unfortunately, even if you pay this extra sum to these rental agencies you still won’t be adequately protected. Not to mention the fine print which may throw a wrench in the whole matter.
Tax Write-Off
I do per diem work from time to time. I also earn money doing other side work. I consider myself self-employed and so everything that I spend I am comfortable writing off on my taxes.
This $100/month is a small amount of money to pay to protect my net worth of nearly $1M. I can write it off against any income I earn which lowers the amount of money that I’ll get taxed on.
Purchasing A Non-Owner Policy
The downside with purchasing a non-owner policy is that you have to call someone on the phone and cannot do it online.
It’s not too bad. Call up your favorite insurance company and request a non-owner policy. Be sure to ask for a personal account and not a commercial one.
Setting one up is really simple and as for how much coverage to ask for. The consensus is that you should have $100k/$300k/$100k of coverage. Since it’s not that much more to have coverage for an uninsured motorist, it’s worth paying for that as well.
Umbrella Policy
You might think that it would be far cheaper to have an umbrella policy instead of a non-owner policy. The problem is that unless you already have an auto or home policy then you cannot purchase an umbrella policy.