PAYG Self drive car hire - getting started.

[password01]

Hi Guys

I am currently investigating buying a car to hire out to members of the public. I would use my limited company for this. During startup phase, the plan is to use a Pay As You Go policy, which means that I will only pay for cover on the days that the cars are hired out.

The problem I am facing is that the brokers I am contacting are giving underwriting refusal. This is really frustrating because all I have given is pretty much the post code of the company and company name, along with my name.

The company is registered in the City of London, which may be affecting decisions.

Has anybody else come across this? And can help on getting a quote - the broker are beyond unhelpful on the matter. Typical computer says no insurance..

Thank you guys


* Note: This is not a disguised remuneration scheme. I currently own two cars and one is the same model as the one I plan on purchasing in the company.

 

[ComPropSolicitor]

Don't think it will work (sorry mate) but, any number of the following can happen;

1. crash,
2. damage,
3. theft,
4. mechanical fault
5. they return the car late

What happens during 1 to 5 if you have someone booked in? and, only 1 car?

 

[password01]

Don't think it will work (sorry mate) but, any number of the following can happen;

1. crash,
2. damage,
3. theft,
4. mechanical fault
5. they return the car late

What happens during 1 to 5 if you have someone booked in? and, only 1 car?

Your post is unhelpful. I have considered all of the above, but they are beyond the scope of this discussion. But to give a quick answer.......

1. That's what insurance is for.
2. That's what insurance is for + deposit (pre auth on credit/debit card).
3. That's what insurance is for.
4. That's what insurance is for (breakdown policy).
5. Deposit (pre auth on credit/debit card)

 

[ComPropSolicitor]

My apologies. I was just trying to portray how difficult it would be to make any amount of money from an operation of this size. My understanding of the car rental market is that it is low margin and high turnover, i.e. its suited to larger operations (where the points mentioned above) can be worked into a business plan. You have no margin for error.

 

[Mr D]

Apparently you are having trouble with getting insurance. So 'that's what insurance is for' doesn't help you either.

If refusal to get insurance as you are, change a variable. Something is either so high risk or so outside parameters that you are being turned down.

 

[password01]

My apologies. I was just trying to portray how difficult it would be to make any amount of money from an operation of this size. My understanding of the car rental market is that it is low margin and high turnover, i.e. its suited to larger operations (where the points mentioned above) can be worked into a business plan. You have no margin for error.

No worries at all

Well, what I have in mind is purchasing a high end car, like an SL 600 V12 Mercedes and renting out here in London. The rental market for luxury cars here is strong. Could charge between 200 - 300 per day.

I would not allow back to back bookings, would probably have a week between bookings so I can clean, manage etc.

Apparently you are having trouble with getting insurance. So 'that's what insurance is for' doesn't help you either.

If refusal to get insurance as you are, change a variable. Something is either so high risk or so outside parameters that you are being turned down.

I know, but the answers were based on getting insurance..

The thing that is so frustrating is the broker only asked for post code, company name, and my name. Then computer said no.

So.. I might try a few other post codes.

It's strange.

 

[Darren_Ssc]

It's strange.

It's not that strange, there are certain postcodes in Bradford where it's near impossible to get insurance for a private car, never mind for commercial use.
I dare say there are other similar blackspots?

 

[password01]

It's not that strange, there are certain postcodes in Bradford where it's near impossible to get insurance for a private car, never mind for commercial use.
I dare say there are other similar blackspots?

Maybe.. but the area is quite good. It's in the City of London, financial district.

That's where my company is registered but is an administrative address only. I would much rather be able to have a dialog with somebody who knows the business and then find an appropriate address to trade out of.

Effectively, the car will be stored in storage and only brought out to handover to renter.

 

[Mark T Jones]

It will be interesting to see if a different postcode gets different results, but my suspicion is that the problem is the nature of the business

Ultimately, there will be someone out there who will have or crate a policy - at s cost. However you are relying very heavily on insurance to mitigate a wide range of risks, so need to consider carefully excess, terms and conditions (there will be lots). And the impact of claims in future premiums- or potentially withdrawal of cover

 

[Mr D]

The thing that is so frustrating is the broker only asked for post code, company name, and my name. Then computer said no.

So.. I might try a few other post codes.

It's strange.

Any of those 3 coming up as refused insurance?

 

[lockyer]

I've done a fair bit of Self Drive Hire Cover. The issues you are facing are:

1. New Startup - insurers will want to see what experience you have in the industry, as this affects how you control risk. Has the broker asked for a copy of your business plan? insurers wont quote a new risk without. the business plan should cover how you market to clients, and how you will mitigate risk

2. Number of Vehicles - for both PAYG and Fleet cover for SDH you need a minimum of 5 vehicles
3. post code - city of London is quite highly rated
4. vehicle types - you haven't said the type of vehicles - are these bog standard city cars or something saucier?
5. they may have detected your attitude to risk (your answers in post 3 aren't great). The insurers expect you to mitigate losses.

Due to high claims, and an industry full of vat carousel fraud, insurers aren't falling over themselves to offer SDH cover. and they now hate PAYG as they aren't getting the full premium to cover claims.

you also need a solution to cover the cars when not on hire.....i.e theft or fire while stood.

you also need a solution to cover the cars when you are delivering/repositioning them/just driving them yourself

 

[lockyer]

FYI - I don't know which brokers you are talking to, but these policies are underwritten by humans at insurance companies that you have to convince to offer cover, not a software programme

 

[password01]

I've done a fair bit of Self Drive Hire Cover. The issues you are facing are:

1. New Startup - insurers will want to see what experience you have in the industry, as this affects how you control risk. Has the broker asked for a copy of your business plan? insurers wont quote a new risk without. the business plan should cover how you market to clients, and how you will mitigate risk

2. Number of Vehicles - for both PAYG and Fleet cover for SDH you need a minimum of 5 vehicles
3. post code - city of London is quite highly rated
4. vehicle types - you haven't said the type of vehicles - are these bog standard city cars or something saucier?
5. they may have detected your attitude to risk (your answers in post 3 aren't great). The insurers expect you to mitigate losses.

Due to high claims, and an industry full of vat carousel fraud, insurers aren't falling over themselves to offer SDH cover. and they now hate PAYG as they aren't getting the full premium to cover claims.

you also need a solution to cover the cars when not on hire.....i.e theft or fire while stood.

you also need a solution to cover the cars when you are delivering/repositioning them/just driving them yourself

This is all great, thank you.

1. I don't have experience in the industry but have studied a lot. I wasn't asked for my business plan but one of the first things I considered was the mitigation of various risks. I have detailed information on how I will do that.
2. That's a shame, no way to get just one car?
3. What is the rating here? That's my company HQ, but not where the car / deals will be done. Could I relocate to somewhere else. Is it pretty much London in it's entirety?
4. That plan is for a 2003 Mercedes SL 600, with a 5.5 LTR engine and 500 BHP. So... pretty saucy. The business plan is this niche. Not regular city cars, which require great scale.
5. I plan on having a very averse attitude to risk and would be very picky about the clientele I choose. Part of my plan is to network and use my contacts in the professional world. I am a software engineer in Finance Services by trade.

Hmm.. the cowboys are at it again. That's a shame, but isn't fraud existent in every industry? Do you think I stand a chance?

You seem knowledgable in this space, would you be willing to have a chat offline about this?

FYI - I don't know which brokers you are talking to, but these policies are underwritten by humans at insurance companies that you have to convince to offer cover, not a software programme

I was talking to "Insure Car Hire" a subsidiary of "Sky". There weren't dealing with a human from the underwriter. I was literally talking to a human in Insure Car Hire and they put my details into a computer and instantly said no, pretty much. What was so frustrating was the guy at the end of the phone not willing/able to comment at all.. He didn't even seem interested in weighing in with his opinion/experience as a worker in the industry.

Many thanks

 

[lockyer]

IF you could get it for a fleet of less than 5 cars, you wouldn't be able to PAYG. The PAYG market caters for the mass market vehicles.

FYI - first year insurance on something like the SL would be a minimum of £5k per vehicle, but nearer 8-9k is more likely for a new start up

 

[password01]

IF you could get it for a fleet of less than 5 cars, you wouldn't be able to PAYG. The PAYG market caters for the mass market vehicles.

FYI - first year insurance on something like the SL would be a minimum of £5k per vehicle, but nearer 8-9k is more likely for a new start up

Interesting.. at least that's a number... not very desirable. But a number none the less.

Would the PAYG rate for a fleet of 5+ be huge? Like "3 digits" for a rental of a few days?

Many thanks for your input, greatly appreciated.

 

[lockyer]

Interesting.. at least that's a number... not very desirable. But a number none the less.

Would the PAYG rate for a fleet of 5+ be huge? Like "3 digits" for a rental of a few days?

Many thanks for your input, greatly appreciated.

You won’t get PAYG for those kind of vehicles....you’ve proven that

 

[password01]

You won’t get PAYG for those kind of vehicles....you’ve proven that

I haven't proven that, because they never even asked me the type of car..

 

[NickGrogan]

FYI - first year insurance on something like the SL would be a minimum of £5k per vehicle, but nearer 8-9k is more likely for a new start up

Like "3 digits" for a rental of a few days?

Like 4 digits more likely.

 

[password01]

Like 4 digits more likely.

First quote is regarding a full non PAYG cover... second is about PAYG cover. Did you even read the thread?

 

[NickGrogan]

First quote is regarding a full non PAYG cover... second is about PAYG cover. Did you even read the thread?

Yes, you said you're asking for the PAYG insurance rate for high spec rental cars for a startup with no experience and suggested an answer to your own question of

Like "3 digits" for a rental of a few days?

I replied with

Like 4 digits more likely.

To be clear I would expect the PAYG insurance for a few days rental of a high end car, like an SL 600 V12 Mercedes for a startup to be in excess of £1000, probably much more.

 

[JEREMY HAWKE]

I would like to offer support and optimism but sadly have nothing but doom to offer
Ten years ago many of the small hire companies shut their doors due to the underwriters making the venture unviable overnight .
Now you will never see a small business just renting out a few vehicles as a business on its own They are always a large hire company or a small hire outfit operating where the owners main business is another activity or one of a few activities on that site

I rent my vans from a Mercedes franchise commercial service garage this is just an example of the owners renting out vans next to their main business