Can this business be insured?

[Layne Campbell]

Hi,

I would like to start a business renting classic vehicles to vacationers and wedding parties and I was wondering where I might find insurance for such a venture. I live in Santa Barbara, California, a year round tourist destination and I believe that there would be a large market for classic vehicle rentals. I would not rent anything outrageously exotic but would focus on domestic vehicles from the 50s and 60s that would be valued between $30,000 and $50,000.

I believe that initially my biggest need would be for insurance that would cover myself and my employees as we deliver and retrieve vehicles or take them for service and maintenance. There are online car-sharing platforms that provide insurance policies as part of the exchange contract and we could use such platforms for our bookings as the company is growing. Eventually we would want to be able to offer renter's liability collision and property insurance directly to our customers similar to the way that major car rental companies do.

I would like to start the company by transferring my personally owned classic vehicle collection into an LLC I have created for this purpose, but companies like Hagerty, J.C. Taylor, and USAA (the current provider) do not insure classic vehicles owned by LLCs. I have also reached out to a number of major Auto insurance providers and local brokers, all with no luck.

I would like to start this company because I think it would provide a lot of joy to people who would otherwise never have the opportunity to drive a classic car, but I will only start it if I can do so responsibly. Can anyone provide thoughts or recommendations on how I might insure this business?

Thanks

 

[adjusterjack]

Can anyone provide thoughts or recommendations on how I might insure this business?

What you want to do isn't much different than any other car rental companies like Avis, Hertz, Dollar, etc and you'll pay similar premiums to the same companies that they use.

A good place to find insurance information for a particular industry is a trade association for that industry.

Here's one:

ACRA Home « American Car Rental Association

Trade associations often have insurance available at competitive prices for their members.

 

[Markthebroker]

What you want to do isn't much different than any other car rental companies like Avis, Hertz, Dollar, etc and you'll pay similar premiums to the same companies that they use.

A good place to find insurance information for a particular industry is a trade association for that industry.

Here's one:

ACRA Home « American Car Rental Association

Trade associations often have insurance available at competitive prices for their members.

His business has a one or two locations. The big rental car companies have hundreds. He has a handful of cars. The big rental companies have hundreds of thousands. He has a small business, the big rental companies have waiver forms, loss controls, training, etc. Due to his size and basically every other factor, the companies that insure Hertz, Enterprise, etc. won't even give him the time of day.

If it was as simple as you imagine, adjusterjack, then he would have found a solution through the other brokers he contacted.

 

[adjusterjack]

If it was as simple as you imagine, adjusterjack, then he would have found a solution through the other brokers he contacted.

I never said it would be simple.

 

[Layne Campbell]

Hi Mark,

Thanks for the reply. You are absolutely right, I have found companies that write policies for large rental fleets but they either do not work with classic vehicles or are not interested in working with a business at a local level.

I will reach out to you next week to discuss the matter in greater detail.

-Layne

 

[DHK]

I have no specific knowledge or advice in this area, but I'd wonder what those who list their cars on www.turo.com do? I keep hearing about it, and I'm sure they aren't limited to just modern cars.

 

[Markthebroker]

I have no specific knowledge or advice in this area, but I'd wonder what those who list their cars on www.turo.com do? I keep hearing about it, and I'm sure they aren't limited to just modern cars.

The sites like that get their coverage through a commercial broker like me. Then they offer some sort of coverage to the people renting the cars, and the ones providing them. Each site is different. Fankly most people simply never purchase the proper coverage and hope for the best, much like the many people without health insurance or retirement savings. Often times, when there is an accident, the owner of the auto tells their personal insurance company (who does not provide coverage for something like this) that they let their friend drive the car, and sometimes it is covered for (fraudulently) under permissive use.

I deal with these scenarios a lot, and this is what actually happens. Unfortunately, society, ride-sharing, and so forth is evolving faster than most of the insurance carriers can adapt. There are very few agents that know how to properly cover for something like this, and what markets to go to. I am one of the few that do.