Car Rental Insurance

[samueltulley]

Does anybody have at least a vauge idea of what type of insurance a business offering car rentals would need? and will the fact that the company is a startup affect the insurance price, if so would this be by a great deal?

Also will the insurance be under my name, meaning I will need a full UK licence and insurance policy? or will it be under the company?

 

[TheGuru2010]

Does anybody have at least a vauge idea of what type of insurance a business offering car rentals would need? and will the fact that the company is a startup affect the insurance price, if so would this be by a great deal?

Also will the insurance be under my name, meaning I will need a full UK licence and insurance policy? or will it be under the company?

Good Afternoon,

Are you referring to self drive hire? You have vehicles you are going to let the public hire from you?

 

[samueltulley]

I am refferring to buying cars which have been pre-owned and then renting them to customers, kind of like a car sharing programme.

 

[TheGuru2010]

I am still not 100% sure what you mean.

Do you mean that you are going to rent out a vehicle long term (You buy a 3 year old vehicle and hire to them for a year for example)

Or

Do you mean you are looking to hire to people short terms, ie around a couple of days when moving house, taking trips etc.

If you describe in more detail what you are hoping to do we can help

 

[samueltulley]

Sorry I didn't realise what you meant..

1) I will be buying used cars from dealers or individuals
2) I will then be leasing/renting the cars short term to individuals for short term (lets say 2-4 days)
3) The age of the customer would most probaly be below 25

 

[TheGuru2010]

Sorry I didn't realise what you meant..

1) I will be buying used cars from dealers or individuals
2) I will then be leasing/renting the cars short term to individuals for short term (lets say 2-4 days)
3) The age the of the customer, would most probaly be below 25

What you are looking for is self drive hire insurance, how much planning have you done for this business so far?

 

[TheGuru2010]

This is a very hard market to get into, you need to do so much planning its unreal & i doubt you will compete with the big boys.

The details outlined below are not actual figures & you will need to do your own homework.

Vehicles - Look around at the market place & current vehicle hire companies, they are usually offering vehicles that are up to 3 years old.

Insurance - There are very few insurers that will offer a driving age of under 25, its hard enough just to get the insurance never mind under 25's at a cheap premium. If you are a new venture & inexperienced expect to pay around £3,000 - £4,000 per vehicle.

Look at the rough sums below:

A new vehicle will cost you lets say £10,000 if you keep that for 3 years & the depreciation is 60% that means you would look to sell the vehicle on for around £4,000 so the vehicle owes you £6,000 over 3 years (£2,000 per year)

One year rough sums:

£2,000 Vehicle cost divide by 365 = £5.48 Per Day
£3,000 Insurance divide by 365 = £8.22 Per Day
£500 Vehicle Maintenance divide by 365 = £1.37 Per day

so if you hired the car out 365 days of the year you would need to hire at £15.07 just to break even, You WILL not get 100% utilization on your vehicles, even if you could get 50% utilization this is £30.14 per days hire to break even - At that I am sure you are priced out of the market.

You also need to bear in mind there are LOTS that i have not factored in, Wages, Valeting, Storage, Rates etc etc etc

The above should hopefully give you a lot to think about - there is a lot to be done before you can realistically look to get things moving (You may have already done this - who knows).

Just a few thoughts for you.

 

[samueltulley]

That was a really good description, thanks alot

When your talking about the insurance, does the 3000 - 4000 pounds apply to under 25's who are paying to rent the car or is that the for me ('the company that rents the cars to people') that i have to pay as an individual for hiring the cars to people?

thanks for the info though!

 

[TheGuru2010]

That was a really good description, thanks alot

When your talking about the insurance, does the 3000 - 4000 pounds apply to under 25's who are paying to rent the car or is that the for me ('the company that rents the cars to people') that i have to pay as an individual for hiring the cars to people?

thanks for the info though!

Hi that would be the annual price for the insurance in your company name / own name (dependent on how you trade), the price that you hire the vehicle out would include insurance for the driver then.

Most companies who allow people to drive that are under 25 state that the hirer must obtain there own insurance.

 

[samueltulley]

Hi that would be the annual price for the insurance in your company name / own name (dependent on how you trade), the price that you hire the vehicle out would include insurance for the driver then.

Most companies who allow people to drive that are under 25 state that the hirer must obtain there own insurance.

Would there be any difference in trading under my own name or company name? and another thing to add is the fact that I am under 25 so will this affect the insurance? so if I hire a car out to someone who is under 25 then they will be basically driving off my insurance?

 

[TheGuru2010]

If you are under 25 then the insurance is going the be the hardest thing for you, have you got money available for this venture?

Just because you have a Self drive hire policy this does not automatically state that the policy holder (weather it be you as a director or you personally), can drive the vehicles under the insurance.

 

[samueltulley]

If all goes well I plan to get angel funding but I understand about the age

Right so just to make things clearer I will have to pay for the insurance and once I have paid for the insurance, it only covers other people and not myself to drive the vehicles?

Is there a special type of insurance that I would require, like an insurance specially provided for people or businesses renting their cars?

 

[lockyer]

You need (cunningly) a Self Drive Hire Insurance policy, and the guru is your man for this.

It covers two things:

1. the vehicles while at your premises and when your own drivers are using it.
2. the vehicles when they are on hire to your customers.

To be honest if you yourself are under 25 I think you are going to struggle to get the insurance, let alone a low quote.

What you need to do, via an insurance broker, is to convince the insurance company of the following:

1. you have are actively controlling the risks associated wit the business. i.e security of the vehicles, vehicle tracking.
2. you are controlling the risks posed by your clients. i.e credit, identity and licence checks.
3. you understand and have experience in the self drive hire business.

If you cant do the above 3 things then you will not get cover for the business

Another couple of points you may not have considered are:

1. newer cars cost less to maintain, are more secure, and will have a manufacturers warranty.
2. when a rental company buys NEW, or Vat Qualifying vehicles, they can claim the full VAT back on the vehicle.

 

[samueltulley]

You need (cunningly) a Self Drive Hire Insurance policy, and the guru is your man for this.

It covers two things:

1. the vehicles while at your premises and when your own drivers are using it.
2. the vehicles when they are on hire to your customers.

To be honest if you yourself are under 25 I think you are going to struggle to get the insurance, let alone a low quote.

What you need to do, via an insurance broker, is to convince the insurance company of the following:

1. you have are actively controlling the risks associated wit the business. i.e security of the vehicles, vehicle tracking.
2. you are controlling the risks posed by your clients. i.e credit, identity and licence checks.
3. you understand and have experience in the self drive hire business.

If you cant do the above 3 things then you will not get cover for the business

Another couple of points you may not have considered are:

1. newer cars cost less to maintain, are more secure, and will have a manufacturers warranty.
2. when a rental company buys NEW, or Vat Qualifying vehicles, they can claim the full VAT back on the vehicle.

Well with the plan of 'starting up' a company, the 3 points that are supposed to convince the insurance broker will have to be words on a business plan.. plus I don't currently hold experience in the car rental industry as its going to be a startup aimed within what I think is a niche segment.

Is this insurance the only type of insurance I need for this type of business on the vehicle side of things? plus if the business plan shows strong potential of the business succeeding and actually making a good return, and the risks are minimized as much as they can be, do you think I will hit a barrier when asked about past experience?

Thanks for your reply though, its gave me a bigger picture of the situation.

 

[lockyer]

Is it not worth getting a job in the industry to gain a couple of years experience.

you have to bear in mind the insurance industry is running away from new self drive hire start ups screaming, mainly due to young drivers, so you need to tick every box to even have a hope of getting cover.

The other insurance broker in this thread is damn good with SDH. I should know as he used to work for me, and if he cant do it no one else can.

My honest advice is for you to ring him and have a long honest chat, but be prepared to hear things you do want to hear.

I could be wrong, but my gut instinct is that the insurance costs will break your business model.

In the last 3 years I have handled the insurance for half a dozen new SDH start ups, and each one of them has gone under. The static costs are massive, so without volume of hires the model crumbles.

 

[FE]

Look up BVRLA as there is a lot more to just buying a vehicle and renting it! Insurance is just one of the issues.

You seem to be looking at short term rental here are a few considerations:

Many enjoy significant manufacturers discounts (up to 40% - 50% in some cases) on new. Thats full warrenty, reduced maintenance etc etc

You will need to factor in replacement vehicles as you will never achieve 100% utilisation. If a vehicle breaksdown not only do you need to get it recovered (so you need AA / RAC / Green Flag cover (dependant on which manufacturer but some only offer 12 months) but then you need to get the Driver mobile again so you need stock of similar ''just in case''. You then need to repair the original and ''swap over'' i.e. driver take the repaired vehicle to repatriate with the Driver and return the replacement. This is reduced the newer the fleet.

You need to supply the RFL, you need the paperwork, systems to invoice damage oh i could go on and on

Insurance is part of it and a major factor but any business plan will need to accomodate ALL expenses and you will need to demonstrate that you understand.

Over the last 24 months some significant players went into administration and a lot of the major banks and lenders (some were shareholders) suffered losses so not the easist to get credit as you will need to negotiate a sub lease agreement.

Obviously if you want to purchase the asset for ''cash'' then you can do what you want but unless you are buying assets for say £2k each (which means the maintenance will be probably be more than the asset) you will need significant cash reserves to start

Best of luck though

FE

 

[Kathylion]

I'm only 20 and I rented a BMW 325I M SPORT from a UK Car Rental companies for 2-weeks, to drive around Central London and North West London. After searching the internet for a car hire company I found there HBC car rentals had the great reviews a very competitive price which rents to young drivers. We stumbled upon HBC Car Rentals; they rent to me with affordable price. I think they have a large array of cars to rent, even to young drivers.
If you're an avid traveler like me, chances are you have rented a few cars in your lifetime and chances are you have likely sampled a few different car rental companies. There are certainly plenty from which to choose and one that I have used several times with good success is HBC Car Rentals. (hbcrentals(dot)co(dot)uk ).

 

[TheGuru2010]

I'm only 20 and I rented a BMW 325I M SPORT from a UK Car Rental companies for 2-weeks, to drive around Central London and North West London. After searching the internet for a car hire company I found there HBC car rentals had the great reviews a very competitive price which rents to young drivers. We stumbled upon HBC Car Rentals; they rent to me with affordable price. I think they have a large array of cars to rent, even to young drivers.
If you're an avid traveler like me, chances are you have rented a few cars in your lifetime and chances are you have likely sampled a few different car rental companies. There are certainly plenty from which to choose and one that I have used several times with good success is HBC Car Rentals. (hbcrentals(dot)co(dot)uk ).

Had a good look round this website & there is no address listed? Did you actually see confirmation that insurance was in force for your age? I would love to know which underwriter is issuing these kind of policy's.

I have been doing self drive hire for a long time & have yet to see a policy which would allow the hire you have mentioned for the age group.

Anyone looking to hire from this company, check that the insurance is correct.

 

[TheGuru2010]

I'm only 20 and I rented a BMW 325I M SPORT from a UK Car Rental companies for 2-weeks, to drive around Central London and North West London. After searching the internet for a car hire company I found there HBC car rentals had the great reviews a very competitive price which rents to young drivers. We stumbled upon HBC Car Rentals; they rent to me with affordable price. I think they have a large array of cars to rent, even to young drivers.
If you're an avid traveler like me, chances are you have rented a few cars in your lifetime and chances are you have likely sampled a few different car rental companies. There are certainly plenty from which to choose and one that I have used several times with good success is HBC Car Rentals. (hbcrentals(dot)co(dot)uk ).

Just called this company who advised I would need to be 25 for this hire?