Vehicle owners listing on Fun2Rent can get $300,000 of liability coverage, and renters get $100,000 of liability and collision coverage. Renters are required to buy the insurance, which costs about $30 per day for an ATV and $50/day for PWC and small boats. In its first six months, the company has facilitated about 75 rentals.
“We provide owners a platform for reservations and $300,000 of liability insurance,” Gardner said. “When their payment comes we deduct a 25 percent commission fee and write them a check for their rental transaction.”
So far Gardner, whose day job is running parks operations for a small Northern California city, has had one insurance claim – a renter damaged a boat. The claim was being processed at press time.
Most of Fun2Rent’s offerings are in Northern California, but owners in Colorado, Florida, Idaho, North Carolina and Texas also have listed vehicles (see Fun2Rent website home page, left). Plus, the company has a representative in South Carolina working to drum up business. It has a handful of ATVs and PWC on offer, with rental rates ranging from $80 to $150 a day for ATVs and $100 to $450 a day for watercraft. Boats start in the PWC range and go up from there.
“At first glance, the rentals are a little pricier than I thought they would be,” Prokup said after looking at the Fun2Rent website. “Even if the P2P companies offer rentals that are less expensive than traditional companies, it's still not cheap. At current pricing, I don't think it's going to supplant purchasing a powersports vehicle for most people who plan to use one with any regularity. There has to be a point where the math tilts in favor of owning versus renting.”
That point seems to be vehicles that are truly recreational, as opposed to daily transportation or work vehicles.
“Right now our most popular categories are boats and personal watercraft. We would like to see snowmobiles on there and UTVs,” Gardner said. “We tested dirt bikes early on, but it wasn’t that popular, I think because the [purchase] price point on dirt bikes is lower.”
Boats and PWC are most popular because they are more expensive to buy and they sit idle longer.
Whether insurers will get into the P2P market depends a lot on the ability to control rental standards and the size of the market, May said. Markel American does offer insurance for fleet rental operators.
“If one of our commercial operations gives someone a pontoon boat and the person gets injured on the boat and files a claim, we go back to the operation and they have to show what they did and signed off on the training,” May said. “If they are not handling it properly, then insurance coverage does not exist. It’s harder to do that peer-to-peer.”
Markel’s policy doesn’t cover the rider. “If the person that rented the vehicle does not have proper liability coverage, when something bad happens, the attorneys go person-to-person and find the person with the deepest pockets,” May said. “If they said they did not get proper training, there definitely is exposure to the person renting the vehicle.”
Renters can check their auto insurance policies to see if they are covered for rental and other vehicles, and may be able to add that coverage, May suggested.
Contract language, the right processes and technology like electronic tracking would help ease some insurer concerns, May said, “but to invest the time we’d really need to be fairly sure that the opportunity exists to generate a market in that business…. If the opportunity is great enough, we will invest time, effort and capital in figuring out how to get comfortable with the risk.”
Fun2Rent reportedly has policies designed to ensure vehicle safety; for example, not accepting vehicles over 10 years old.
“We have guidelines of what equipment we will accept. If we are alerted or suspect that the equipment is compromised, then we can request any kind of maintenance records, annual inspection records, anything that will prove that the owner has maintained it to manufacturer standards,” Gardener said. “We lay out guidelines in our owner policy that state we can request records at any time for the equipment. [Equipment] is generally vetted by the renters.”
But that could be a quality control headache, MacIntyre said. (continued)