It’s the nightmare scenario. A police officer calls you: “Your vehicle was involved in a critical injury accident.” The guest ran a red light and hit a pedestrian. The medical bills are already over
The guest only has state-minimum insurance coverage of $500,000.
The lawyer for the victim is now suing you (the owner) for the difference.
Key Takeaways
- The Graves Amendment Protects You (Mostly): Federal law protects rental car companies (and Turo hosts) from “Vicarious Liability,” meaning you aren’t liable for the driver’s negligence just because you own the car.
- The Exception – Negligence: If you rented out a car with bad brakes or bald tires, the Graves Amendment does not save you. You are liable for “Negligent Entrustment.”
- Turo’s Liability Policy: Turo provides $750k (standard) or $1M (if chosen) in liability coverage for the host.
- Your Personal Assets are at Risk: If the claim exceeds Turo’s cap, they come after your house.
The “Why”: Vicarious Liability
In many states, the owner of the car is responsible for whatever the car does.
However, 49 U.S. Code § 30106 (Graves Amendment) says: An owner of a motor vehicle that rents it to another is not liable for the harm… if there is no negligence or criminal wrongdoing on the part of the owner.
Your defense hangs on proving you maintained the car perfectly.
The Investigation: Protecting Your Assets
I spoke with an asset protection attorney regarding Turo fleets.
- LLC Protection: Holding the cars in an LLC (not your personal name) adds a layer of protection, but it can be pierced if you are the sole operator.
- Umbrella Insurance: Most personal umbrella policies exclude business activities. You need a Commercial Umbrella Policy to cover you above the Turo $750k limit.
- Maintenance Records: If you get sued, the first thing they subpoena is your maintenance logs. If you skipped a brake check, you lose the Graves Amendment protection.
Comparison: Liability Layers
| Layer | Who Pays? | Limit |
| 1. Guest’s Insurance | Guest’s Personal Policy | usually low ( 25k−25k− 50k) |
| 2. Turo Liability | Turo’s Insurer (Travelers/etc) | $750,000 |
| 3. Commercial Umbrella | Your Extra Policy | $1M – $5M (If you bought it) |
| 4. Your Personal Assets | You | Everything else |
[IMAGE: Diagram of the “Liability Waterfall” showing the order in which insurance policies pay out in a catastrophic accident]
Step-by-Step Action Plan
- Keep Perfect Maintenance Logs: Document every tire change, brake job, and safety inspection. This is your shield against “Negligence” claims.
- Verify the License: Always check that the driver’s license matches the booking. If you give the car to an unlicensed driver, you are liable.
- Get an LLC: Move the titles out of your personal name.
- Consult a Broker for Umbrella: Ask for “Commercial Excess Liability” that sits on top of the Turo policy. It is hard to find, but it exists (e.g., via GMI or specialized brokers).
FAQ
Will my personal umbrella policy cover this?
99% of the time, No. Personal umbrellas exclude business use. Read the exclusions carefully.
What if the guest was drunk?
That is the guest’s negligence, not yours. You are protected under the Graves Amendment (unless you knew they were drunk when you gave them the keys).
Does Turo provide a lawyer for me?
Yes. If you are sued for an accident during a trip, Turo’s insurance carrier has a “Duty to Defend” and will hire an attorney for you.