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Understanding the Insurance Gaps in Peer-to-Peer Rental Platforms

Peer-to-peer (P2P) rental platforms—such as Airbnb, Turo, and equipment-sharing marketplaces—have transformed the way people earn income from unused assets. However, these platforms present insurance brokers with gaps in coverage that standard personal or commercial policies often fail to address.In this article, we break down the hidden exposures in P2P rentals and provide you with tools to protect your customers.

Why P2P Rentals Are a Growing Exposure

Consumer demand for flexible, reasonably priced rentals of vehicles, residences, and tools is fueling the sharing economy’s growth. However, the majority of renters and hosts assume their personal insurance or platform-provided coverage is sufficient—a dangerous misconception.

  • Host incentives: The average Airbnb host earns 14,000 annually, while Turo hosts generate 10,516 per car.
  • Platform growth: The peer-to-peer (P2P) rental apps market was valued at USD 17.7 billion in 2024 and is projected to grow at a compound annual growth rate (CAGR) of 10.9% between 2025 and 2034.

Key Insurance Gaps in P2P Rentals

Auto Rentals (e.g., Turo, Getaround)

  • The Gap: Personal auto policies typically exclude coverage for commercial activities—including renting out a vehicle—leaving hosts unprotected.
  • The Risk: If a renter causes an accident, the host’s insurer may deny the claim entirely, citing the policy’s “commercial use” exclusion.
  • Platform Shortfalls: Even when platforms like Turo offer protection plans, hosts face steep deductibles (up to $3,000) and exclusions (e.g., off-road use), shifting significant financial risk back to the owner.
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Home/Property Rentals (e.g., Airbnb, VRBO)

  • The Gap: Most homeowners’ policies exclude short-term rentals or cap coverage for “business activities,” leaving hosts underinsured.
  • The Risk: A guest’s negligence—such as accidentally starting a fire—could result in a denied claim, forcing the host to pay out-of-pocket for repairs.
  • Liability Exposures: Injuries to guests (e.g., slip-and-fall accidents by a pool) may not be covered under standard personal liability policies, opening the door to costly lawsuits.

Equipment Rentals (e.g., Fat Llama, PeerRenters)

  • The Gap: Renters’ insurance policies rarely cover damage to third-party equipment, creating a critical gap for owners who loan out tools, cameras, or machinery.
  • The Risk: If a borrowed power tool malfunctions and injures the renter, the owner could face a lawsuit for damages—even if the equipment was in good condition.

Platform Liability Ambiguities

  • The Gap: P2P platforms often transfer primary liability to users, creating confusion about who is responsible when claims arise.
  • Airbnb: While the platform offers $1 million in Host Liability Insurance, it acts as secondary coverage—meaning the host’s personal policy must pay first. It also excludes intentional acts (e.g., assault by the host), leaving gaps in protection.
  • Turo: Hosts enrolled in Turo’s “protection plans” are still required to pay deductibles upfront (up to $3,000) before coverage applies, potentially burdening them with unexpected costs even for valid claims.
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Key Insurance Gaps in P2P Rentals

P2P rentals blur the line between personal and commercial risks, creating gaps that leave clients exposed. By understanding platform limitations, advocating for tailored coverage, and tapping into specialized markets, brokers can transform this challenge into a value-added service.

Endorsements for Hybrid Use

  • Add “rideshare” or “rental activity” endorsements to auto policies (e.g., Progressive’s Ride for Hire).
  • For homes, consider a “business pursuits” endorsement or standalone vacation rental policy.

Commercial Policies for Frequent Hosts

  • Clients renting assets regularly may need commercial auto, landlord, or equipment rental insurance.

Specialized P2P Products

  • Collaborate with providers of specialty insurance, that offers customized short-term rental liability.
  • Peer-to-peer Equipment Coverage: Provides coverage for loss or damage sustained while renting.

Require Renters to Provide Proof of Insurance

  • For high-value assets (e.g., luxury cars, industrial tools), mandate renters carry their own liability coverage.

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