Allow People to Rent Out Their Own Vehicles – Mackinac Center for Public Policy

May 20, 2022 by No Comments

Supply chain problems are causing a shortage in many auto parts, making fewer cars available and pushing up prices for the vehicles that are out there. This in turn is prompting a “rental car apocalypse” – a scarcity of vehicles to rent and higher prices for the rental cars that are available.

The solution is to make more cars available to rent. It’s already happening through new platforms that allow people to rent out their own vehicles when they aren’t using them. It’s a win-win: Those looking to rent have more options and those looking to earn a little extra money can do it.

The idea is already up and running. Turo, the largest of the peer-to-peer rental companies, has vehicles available to rent in Michigan. But the Legislature is looking to regulate this new industry, and some members have introduced a package of bills to do so.

House bills 4915, 4916 and 4917, with a bipartisan list of co-sponsors, would create the Peer-to-Peer Car Sharing Program Act. The package would:

  • Require the carsharing platform to assume liability for the vehicle when it is being rented, unless the owner engages in intentional fraud
  • Mandate an extensive insurance policy that covers the vehicle owner and the driver who rents the vehicle
  • Allow auto insurers to not cover rental vehicles
  • Establish record-keeping and disclosure requirements
  • Require that safety recall issues be repaired before an owner can rent out the vehicle
  • Mandate certain taxes be collected and paid by the carsharing platform
  • Require that carsharing programs enter into agreements with airports before vehicles can be dropped off or used to pick up renters from that property

Most of this is unobjectionable. They’re either things that are already being done or should be required. (Insurers need this information and should get to choose whether to cover vehicles taking part in this activity). The taxing provision must be fair across the board. State policy should not favor either companies or individuals who rent out vehicles.

But the airport provision is unnecessary. Airports already have authority to enter into agreements with individuals and companies who use their property or services – presumably, rental companies already have those types of agreements. And the mandate in the bills says that even a person who rents a vehicle to drive from home to airport – which uses only a minimal amount of airport facilities or services – will essentially be treated like a company renting out space at the airport. That is overly intrusive and anti-competitive.

It’s a good idea for the Michigan Legislature to have a loose regulatory structure to allow people to rent out their own vehicles. But it should do so in a way that is as unobtrusive as possible.

Permission to reprint this blog post in whole or in part is hereby granted, provided that the author (or authors) and the Mackinac Center for Public Policy are properly cited.



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