The concept of renting your RV to strangers instead of it sitting idle between adventures is gaining traction. A number of peer to peer platforms have popped up over the past few years in what’s known as the share economy.
It’s super easy to rent someone else’s car through GoGet or an apartment through Airbnb, and it is now burgeoning within the RV sector. Platforms including Camplify, SHAREaCAMPER, MyCaravan and Outdoorsy in Australia and Mighway in New Zealand offer the opportunity to make money and offset your RV’s purchase price, pay off your finance loan or simply afford to travel more.
But, before you start counting all your gold, it’s important to understand where you as an owner sit with respect to insurance. There’s no point making a neat little profit if you have to spend it fixing damages that your policy won’t cover.
Here we talk to insurance experts, representatives from peer to peer platforms and an owner who currently rents out her motorhome. Much of the advice given here is general — as there are many variables to each policy and circumstance. The bottom line is that if there was ever a time in your life to read the fine print, this is it.
PERSONAL VS BUSINESS
As a general rule, most insurance policies for RVs in Australia cover you for private use only. Once you lease your vehicle to another person for money, it then changes the nature of the use of the vehicle to a business, which in turn affects what is covered.
Con Tsobanopoulos, Chief Executive Officer of RV insurance specialists Ken Tame & Associates, explains.
“Unfortunately, what most people forget as they get caught up in this solution to generate more revenue to maintain their RV whilst they’re not using it, is their insurance,” he tells Caravan World.
“Most policies are designed and offer cover for ‘private use’ which by definition is defined as ‘social, domestic and leisure purposes’. Therefore ‘hire or use in connection with an occupation or business’ does not constitute as ‘private use’ and would be excluded under the policy.
“Whether you share your RV once or a dozen times during a 12-month policy period (in return for a financial benefit) it’s still constituted as business activity, which is excluded under the private use cover of most comprehensive RV insurance policies.”
According to Tsobanopoulos, comprehensive policies usually cover accidental loss of (including theft) or physical damage to your RV; basic contents; emergency accommodation; emergency repairs; fusion; food spoilage; hire vehicle costs; windscreen and glass breakage; and transportation costs. If you hire your vehicle without checking that your insurer is happy for you to do so, then none of these will be covered if there is an incident while someone else is operating the vehicle.
WHAT’S THE SOLUTION?
In short, you will need to obtain additional cover for a hire arrangement, either through your existing insurer, or through the rental platforms themselves.
Ken Tame, as the primary insurer for the Campervan and Motorhome Association of Australia (CMCA), does not offer such additional cover — and neither do many other RV insurers at present.
“The majority of our policyholders are permanent travellers with more of the top-end RVs,” he says.
“Essentially, their RV is their home and as a result, are not inclined to be sharing it.”
CIL Insurance does offer cover for rental purposes. Its Hire Use Option is an extension of an existing RV insurance policy but for an additional premium.
The extra cost varies depending on details such as the address where the RV is kept, its age, the total sum insured, age of youngest driver and choice of excess, according to CIL Spokesperson James Spence.
“CIL’s Hire Use option ensures customers’ caravans or motorhomes are protected when they hire it out to others,” he says. “Hire Use also covers loss or damage to your caravan, or motorhome, as well as legal liability. Events that are covered include; accidents, theft or attempted theft, fire, storm, flood, malicious damage and hail. For motorhomes, but not caravans, the Hire Use option also covers contents.”
Owners need to inform CIL of the timeframes when their RV will be rented out, as well as when it is returned so the company can adjust their premiums for the relevant durations.
The other alternative is to pay for insurance through the platform you list the vehicle through. Each site will offer a different product that will insure different things for varied premiums and excesses, so it is vital to read through the product disclosure statements very carefully.
Justin Hales is CEO of RV sharing site Camplify, which has around 3000 RVs from camper trailers to luxury motorhomes on its books, and about 2500 for rent at any time. He tells Caravan World that Camplify partnered with an insurer to provide a policy. This was developed on the example of rental fleets and “ensures a customer is protected while their RV is out on hire”.
Owners can pay a premium on a daily casual rate, or become a Premium Member where a monthly fee is deducted. All policies include roadside assistance.
Hales says Camplify caters to individual owners who want to make a little income on the side, as well as owners with their own fleet that operate as a small business within the platform. But in both instances he advises owners to check their existing policies carefully if considering listing, and also referring to his product disclosure statement for the minutiae of what is actually covered.
“Generally speaking, we have looked at all the standard RV policies that are out there and made sure that we have general coverage for all those normal things that occur in any RV policy when looking specifically at the rental way that people transact,” he says.
“The key that we need to understand is that every situation that occurs is different but each one of those claims are assessed on a one-on-one basis based on the specifics of that claim and by the insurance company. If we need to get involved, we will get involved in a consultative nature and assist both parties in that process.”
Each hirer must pay a $1000 bond and, in the event of a claim or need to pay damages, that money is used either to pay for repairs or as the excess for an insurance claim, which the owner must lodge.
AN OWNER’S PERSPECTIVE
In 2017 Faith Davey sold her Melbourne home, bought her 2011 limited edition VW six-berth Renegade motorhome and spent nine months on a Big Lap of Australia with her two children, Matilda then aged seven and Charlie then four. They had the adventure of a lifetime, but on their return, Davey started to wonder what she would do with her RV. She posted as such on a family travel-focused Facebook page, and someone suggested Camplify.
Davey now uses Camplify as a major income stream and has so far earned just over $31,000. Originally, she used CIL’s Hire Use option for her insurance, but once she realised there was quite a big demand for her RV, which has its own website (www.motorhomemama.com.au), she switched to the Camplify Premium membership offering. She says the rates vary for owners depending on the value of their RV.
“CIL were fantastic but, going from personal use to hiring it out, the rate triples,” she says. “And I would often forget to let them know that it wasn’t being hired anymore so of course it would come home and I was paying the triple rate with it just sitting out the front.”
It’s fortunate that Davey made sure she was covered — she has had to make three claims in 12 months. The first was the worst — a renter ‘hugged’ a tree and caused $10.000 of damage to the van by taking out her awning and damaging her side panelling and wheel hub. It made her look at her beloved Renegade motorhome very differently.
“When I hand it over to a customer I tell them ‘this is my baby’”, she says. “She looked after us all the way around Australia on our trip and after that first one happened I really had to change the way I looked at it and turn it into a business mindset.
“These things are going to happen and I have to be OK with it and I can’t get emotional. You just have to get it fixed and keep on going.”
Davey says she now has a great relationship with her local repairer Ace Caravan Repairs (who she says are “pretty happy” with her for the business) and she has the claims process down pat, including taking photos, contacting the insurers and filling in the paperwork so she can get her RV back on the road and earning money. She says her policy covers accidental damage, fire, theft and complete loss, but not mechanical trouble.
“If my motorhome breaks down then that’s on me,” she says. “They will pay for up to $500 to have it transported to a mechanic.”
But, even though she seems like a pro at this, Davey says it is still vital to keep on top of the details — and there is always room for more research.
“Insurance is important,” she tells Caravan World. “I probably should know much more than I do.”
THE NZ EXAMPLE
Rental giant Tourism Holdings Limited (THL) has been leasing motorhomes and caravans for 30 years in New Zealand, the US and Australia under the Maui, Britz and Mighty brands, and its Mighway peer to peer platform was launched in 2015 in NZ as well as the US.
CEO Dave Simmons tells Caravan World that the majority who list their RVs with Mighway own a single motorhome or caravan and want to earn a passive income from it to offset its cost.
Simmons concedes the issue of insurance is a “complex area” but says his platform’s prime objective is to give owners a positive experience. Like Camplify, it partners with insurance companies to develop a rental policy but, it differs in that it is compulsory for owners to buy into it.
“The reason we do that is it ensures we know the owner’s vehicle is protected while it is on the road, and if something goes wrong then we are able to facilitate the repair of that vehicle,” he explains.
“We also do require the vehicle to be insured separately. We think that is good practice for an owner to insure their vehicle -—not because it is exposed in any way while it is on the road.”
For exact details of what Mighway’s policy covers, Simmons also says owners need to peruse the product disclosure statements. But in general terms, any fire, theft or damage caused while the vehicle is in hire is covered. What is doesn’t cover is mechanical breakdowns, normal wear and tear or wilful damage. But, for the latter, Simmons says Mighway will step in this situation.
“We basically say to owners, they will not be at risk if someone has wilfully damaged your vehicle and renders that insurance null and void,” he says. “We will underwrite that and go out and seek damages from the guest in that situation. We have a situation currently where a vehicle was wilfully damaged significantly and we have stepped in to get the vehicle sorted out.”
Simmons says a new insurance offering which effectively acts as income protection should an RV be out of action, is becoming increasingly popular.
The overwhelming advice from all those CW spoke with for this story was simple — do your research, read the fine print and seek advice before committing to hiring out your pride and joy.
TIPS TO REDUCE YOUR RISK
- Confirm with your insurance company what your policy will and won’t cover
- Investigate the policy offered by the peer to peer platform - always read the fine print twice
- Ensure those people who may want to rent your vehicle have a good understanding of how to drive it or tow it (consider a test drive)
- Develop a comprehensive handover session with renters
- Design a detailed booklet listing all the features of your RV, step-by-step instructions for cooktops, toilets, power management etc as well as emergency contact numbers
- Remove any valuables from the RV
- Include hard-wearing plastic utensils, plates and cups - no crockery or glassware.