Small vehicle hire company set up!
Discussion
Hi All. I’ve not used the forums for quite some years to be honest but I have seen threads with similar conversations from several years ago..
we are considering starting a small van/car hire business and wondered if there’s anyone on here running similar businesses that would be happy to offer any real world advice. Particularly with insurance🙄! I wondered if, with the introduction of short term cover companies like Tempcover if anyone has been able to utilize this service for a small self drive hire business? It would initially be a ‘side hustle’ type business most likely providing weekend hires so a very expensive policy covering the whole year could make it not viable!
The advantage we have is having a commercial site available just a few steps away from a rural railway station. We also have some unique ideas on how to market the business to set us apart from others doing the same, so I think we have some potential to succeed 🤞🤞
Thanks
we are considering starting a small van/car hire business and wondered if there’s anyone on here running similar businesses that would be happy to offer any real world advice. Particularly with insurance🙄! I wondered if, with the introduction of short term cover companies like Tempcover if anyone has been able to utilize this service for a small self drive hire business? It would initially be a ‘side hustle’ type business most likely providing weekend hires so a very expensive policy covering the whole year could make it not viable!
The advantage we have is having a commercial site available just a few steps away from a rural railway station. We also have some unique ideas on how to market the business to set us apart from others doing the same, so I think we have some potential to succeed 🤞🤞
Thanks
I have a business which hires out specialist vehicles, but we deal with B2B opposed to B2C so all of our vehicles sit on COI but I do have some experience of the B2C Self Drive market.
In terms of your insurance proposal of using a short-term insurance cover provider my advice is to stop away from it. I’ve not read their T&C’s of the cover offered but I would have thought that self-drive hire will not be covered. In the very unlikely event that it was covered, it’s still a bad idea in my mind;
Connected Interest;
If the hirer hires the vehicle and insures it themselves on a daily basis and a claim arises, then it is down to the hirer to make the claim and not yourself. If the hirer does not want to play-ball for whatever reason, then you cannot claim, as you’re not the insured nor the third-party.
Conversion Theft;
Daily insurance will not cover you for conversion theft. If a vehicle is obtained fraudulently then you will not have conversion cover on the policy and therefore will be uninsured if the vehicle is stolen by the hirer. Either by fraudulent or non-fraudulent means. If a vehicle is stolen then the Police will not be interested in helping you as the vehicle would remain insured via the COI and therefore tell you the matter is civil. If you have the correct SDH policy in place and the vehicle is unreturned, you can then cancel the insurance. The Police then become interested as the vehicle is being driven without any insurance in place, and will put an ANPR marker on for no insurance which will trigger a stop and a seizure. You then get the vehicle back from the recovery agent.
Referenencing;
In order to mitigate against conversion theft then your SDH will want to reference the hirer (they have access to all sorts of systems - electoral roll, many other systems etc.) to ensure that the proof of ID’s you are given are legitimate. Without the SDH policy to do this for you, you’re leaving yourself wide-open for conversion theft.
Off-Hire Cover.;
Who will insure your vehicles when off-hire? Vehicles still need storing and moving, plus there is the theft anspect etc. of which a full SDH policy will keep the vehicle on risk even when off-hire and being moved by yourselves, staff and provide theft cover.
These are the three / four major pitfalls off the top of my head by not having a specialist SDH policy in place.
The first rule of hire is make sure you get it back. If I met you in the street and we’d never met before, would you give me the keys to your car and let me drive it away on the basis I might be who I say I am, I might keep insurance on your car in place whilst I’ve got it and I might return it when I say I will?
No you wouldn’t and this is why SDH policies are so expensive for insurers. Risk v Reward.
In terms of your insurance proposal of using a short-term insurance cover provider my advice is to stop away from it. I’ve not read their T&C’s of the cover offered but I would have thought that self-drive hire will not be covered. In the very unlikely event that it was covered, it’s still a bad idea in my mind;
Connected Interest;
If the hirer hires the vehicle and insures it themselves on a daily basis and a claim arises, then it is down to the hirer to make the claim and not yourself. If the hirer does not want to play-ball for whatever reason, then you cannot claim, as you’re not the insured nor the third-party.
Conversion Theft;
Daily insurance will not cover you for conversion theft. If a vehicle is obtained fraudulently then you will not have conversion cover on the policy and therefore will be uninsured if the vehicle is stolen by the hirer. Either by fraudulent or non-fraudulent means. If a vehicle is stolen then the Police will not be interested in helping you as the vehicle would remain insured via the COI and therefore tell you the matter is civil. If you have the correct SDH policy in place and the vehicle is unreturned, you can then cancel the insurance. The Police then become interested as the vehicle is being driven without any insurance in place, and will put an ANPR marker on for no insurance which will trigger a stop and a seizure. You then get the vehicle back from the recovery agent.
Referenencing;
In order to mitigate against conversion theft then your SDH will want to reference the hirer (they have access to all sorts of systems - electoral roll, many other systems etc.) to ensure that the proof of ID’s you are given are legitimate. Without the SDH policy to do this for you, you’re leaving yourself wide-open for conversion theft.
Off-Hire Cover.;
Who will insure your vehicles when off-hire? Vehicles still need storing and moving, plus there is the theft anspect etc. of which a full SDH policy will keep the vehicle on risk even when off-hire and being moved by yourselves, staff and provide theft cover.
These are the three / four major pitfalls off the top of my head by not having a specialist SDH policy in place.
The first rule of hire is make sure you get it back. If I met you in the street and we’d never met before, would you give me the keys to your car and let me drive it away on the basis I might be who I say I am, I might keep insurance on your car in place whilst I’ve got it and I might return it when I say I will?
No you wouldn’t and this is why SDH policies are so expensive for insurers. Risk v Reward.
I’ve no direct experience, but would think that Insurance will be critical.
About a year ago an independent car/van/bus/bike place opened on next to me on our industrial estate… they specialise in short term (by the hour) hire of electric vehicles.
The amount of damage they have is unbelievable, fortunately the other side of me is a car repair centre…. Their business is booming…..
About a year ago an independent car/van/bus/bike place opened on next to me on our industrial estate… they specialise in short term (by the hour) hire of electric vehicles.
The amount of damage they have is unbelievable, fortunately the other side of me is a car repair centre…. Their business is booming…..
Thanks so much for the replies! Some great points made and lots to think about.. I will try and contact a specialist broker this week and see what options are available to me. Pretty much impossible to know if it’s even a viable business without getting a realistic cost for insurance!
I totally hear you regarding all the potential damage etc and possibly introducing hourly hires was an option I was hoping to introduce further down the line if there is demand for it! I guess what’s important is whether that business is still running despite the constant repairs? It must be paying its way if so… or it’s a front for something dodgy which I’m learning is quite common with car hire businesses… allegedly!!
I totally hear you regarding all the potential damage etc and possibly introducing hourly hires was an option I was hoping to introduce further down the line if there is demand for it! I guess what’s important is whether that business is still running despite the constant repairs? It must be paying its way if so… or it’s a front for something dodgy which I’m learning is quite common with car hire businesses… allegedly!!
The main thing about vehicle hire is to remember that the way to make money from it is either money laundering, selling vehicles, high usage rates from long-term hires/leasing and/or niche markets. For context I/we used to hire out vehicles as a side project up to Aug 2023, our fleet varied in size and make-up over the years but for 2023 it consisted of 3 x motorhomes, a van and an armoured car (the real money maker).
Insurance
For a long time we ran 2 policies, one for the majority of our business and one for the hire fleet. The last few years our hire policy was underwritten by London Optimum (I think) as a full policy (there are policies which will charge you per day hired out which may be of use when starting) which cost £14,168 +VAT for the 5 vehicles. We had a £1,000 excess (£5k for the armoured) and a very, very low claim rate.
Vehicle Sourcing
As I mentioned above, one of the money makers is from selling vehicles. There are 2 schemes you can join, United Rental Systems & Vehicle Rental Services, which gives you access to significantly discounted vehicles. From memory the discounts were in the 30-40% range and you had to keep the vehicles for 6 months and 6,000 miles before selling them on, with proof of hires. I never used either as, being honest, the hire department was very much a side project without a dedicated person focusing solely on it. The vehicles I did have were mostly sourced through industry contacts with some of the normal hire cars purchased from an auction.
Why I stopped
Likely one of the questions you're asking. I didn't (and still don't) have the space to grow it, nor even desk space for 1 employee to focus on it. My premises is in a relatively rural location so the run of the mill stuff wasn't being used a lot and sourcing new vehicles for the niche areas (motorhomes and armoured) was getting to be a nightmare. It's definitely something I would look at in the future with a view to putting proper systems and people in placeso that it could grow
Insurance
For a long time we ran 2 policies, one for the majority of our business and one for the hire fleet. The last few years our hire policy was underwritten by London Optimum (I think) as a full policy (there are policies which will charge you per day hired out which may be of use when starting) which cost £14,168 +VAT for the 5 vehicles. We had a £1,000 excess (£5k for the armoured) and a very, very low claim rate.
Vehicle Sourcing
As I mentioned above, one of the money makers is from selling vehicles. There are 2 schemes you can join, United Rental Systems & Vehicle Rental Services, which gives you access to significantly discounted vehicles. From memory the discounts were in the 30-40% range and you had to keep the vehicles for 6 months and 6,000 miles before selling them on, with proof of hires. I never used either as, being honest, the hire department was very much a side project without a dedicated person focusing solely on it. The vehicles I did have were mostly sourced through industry contacts with some of the normal hire cars purchased from an auction.
Why I stopped
Likely one of the questions you're asking. I didn't (and still don't) have the space to grow it, nor even desk space for 1 employee to focus on it. My premises is in a relatively rural location so the run of the mill stuff wasn't being used a lot and sourcing new vehicles for the niche areas (motorhomes and armoured) was getting to be a nightmare. It's definitely something I would look at in the future with a view to putting proper systems and people in placeso that it could grow
Hi OP
I manage a rental business, circa 200 vehicles, 70% B2B on COI (customer own insurance) and the rest is 'retail'
We have a very varied fleet, cars of all sizes and vans of most types and sizes.
The hard part of it is keeping the utilisation up, you need to have everything out, all of the time to make it worthwhile. While they are sat around doing nothing, they are costing you money. Then theres the servicing, breakdowns, etc etc etc.
Insurance will be your biggest struggle, we pay an absolutely eye watering amount for insurance, hence we try and push the COI rentals as much as possible.
It really is a minefield and probably not the easiest way to make money TBH, the other side of the business I run is Commercial vehicle sales which is much, much, much easier
You buy for £X, do prep at £Y cost, sell for £Z and it's profit. Nice and clean and simple!
I manage a rental business, circa 200 vehicles, 70% B2B on COI (customer own insurance) and the rest is 'retail'
We have a very varied fleet, cars of all sizes and vans of most types and sizes.
The hard part of it is keeping the utilisation up, you need to have everything out, all of the time to make it worthwhile. While they are sat around doing nothing, they are costing you money. Then theres the servicing, breakdowns, etc etc etc.
Insurance will be your biggest struggle, we pay an absolutely eye watering amount for insurance, hence we try and push the COI rentals as much as possible.
It really is a minefield and probably not the easiest way to make money TBH, the other side of the business I run is Commercial vehicle sales which is much, much, much easier
You buy for £X, do prep at £Y cost, sell for £Z and it's profit. Nice and clean and simple! Perhaps something like Turo is an option to test the waters? - they seem to take care of the insurance side of things etc. and bring a bit of visibility as Americans etc are already familiar with the name.
Never used it myself but have noticed that some hosts locally have scaled to having multiple (10ish) vehicles so I have to guess that its a worthwhile exercise.
Never used it myself but have noticed that some hosts locally have scaled to having multiple (10ish) vehicles so I have to guess that its a worthwhile exercise.
We have a zip car bay near us, judging by the damage I see on the vehicles there is no way I would be renting anything to the general public.
We borrowed a VW Transporter van that had 3000 miles on the clock. The sill was all pushed in and both sides had dents and scrapes down the side.
I imagine the insurance and repair costs means they just don't bother claiming and leave the damage as it is.
We borrowed a VW Transporter van that had 3000 miles on the clock. The sill was all pushed in and both sides had dents and scrapes down the side.
I imagine the insurance and repair costs means they just don't bother claiming and leave the damage as it is.
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