The Limos.com Forum Has Moved!!!

We have 5 cars and my insurance is $42,000 a year. I know you'll cry right along with me that this is outrageous. Let me lay a few facts down here. I have 5 cars. 3 are 18 - 22 passenger. 2 are 8 passenger.

To comply with federal law the cars with 16+ are required to have 5 million coverage. Adding 4 million on top of the normal 1 million adds $4000 per year per car.

The base rate to have the cars covered for damage and the 1 million the federal law requires comes out to about $22,000 per year. That's not to bad. What kills me is the extra $4,000 per car to get them to the 5 million coverage that is required for our cars that are technically busses because of how many passengers they hold.

So here's the math. 22k plus 3 bus size cars at 4k each. That's 34k. So why am I saying that my insurance is 42k!?!

My insurance company is requiring me to cover all of the cars up to 5 million total. So my two cars that only require 1 million in coverage I'm being forced to cover them at 5 million. They refuse to take this off!

I'm really pissed off about this. We are being 100% legal and making every effort to do so even though my competition is not. Now this extra forced insurance is just adding insult to injury.

The only option they offer me is for me to split my fleet into two companies. They tell me that if I open a second LLC, get a second EIN and split the billing on the cars to the small cars in one company and the big cars in the other I can then get out of paying this extra 4k per small car.

Does anyone think this is bullshit or have any good suggestions?

I do have quotes pending from other companies. But so far it looks like the others are going to treat this the same way.

Suggestions?

I see you posted your request re: insurance in February but I just joined... if you're still looking for quotes call Phil Brun at Kiely Hines in Louisville KY. I think he writes insurance all over the country. I've seen his name in the Forum. If you can't find it I'll get it for you. He saved me a LOT of money.

I do apologize, after posting Jen called me to let me know that she can only write policies within the state of Ohio, which I didn't know when I posted her info originally. I guess she got a few calls because she called me two days after posting and asked me if I had posted her info.

She is on the ball though, she does what it takes to get things done.

quote:

Originally posted by Digger:
Sounds like you guys need to call my girl Jen at Buxton Insurance, her rates killed everyone elses rates.

Jennifer - Buxton - 937-836-4536

Make sure you tell her that Chris from Premier Limousine sent you.

I have to give props to Digger and his insurance agent, Jen. Though she does not do policies for my state, she had an associate who does, and was very helpful with getting me hooked up with him.

We are now saving nearly $3000 a year, per car for 1.5 million coverage.

If you are up for renewal, give her a call.

Check out the article on DMC's in the February Limousine Digest. Your international connections may be of great use to you in this niche.

quote:

Originally posted by MarkRi:
marke I never heard of anyone starting a busines with out a plan. you are brave lol. you wwere lucky to even get a loan, dang. i dont think no bank in chicago would have gave you the $
you says you start one new busines every year. why do you do that?
your only a ex bus driver but you buildt this company up like you are donald trump lol. my doc told me he couldnt even get finansing like that lol, you are good with banks lol
i posted the link to youre case on another message board. i hop you dont mind but i think lots of people can learn some thing.

Don't get me wrong. We had a plan. But it was not a formal business plan. Also. We are not new to business in general. I have 3 other companies that are doing well. Our first limo was paid for in cash. We did finance the two new limos we have. We used our other businesses as the cases for the loans because they can easily pay for the cars.

One thing that is different though is that our other companies are all Internet based. We deal with international markets. This is a very different thing than dealing with a local market. You would think that if you could deal with the world you could do your neighbors easily. lol That's not the case.

Dean, you have some good advise. We are doing some of that but one of the keys may be to do more.

Markee, We primarily focus on large pieces of business. We are involved with our tourist commission, chamber of commerce, etc. The value of a sales rep in the field for you is in introducing your product line to a wide cross section of professional people. Top flight charities should be added to the mix as the movers and shakers of your town will be found there. Certainly you should reach out to the Oregon Event Planners and Destination Management Companies. the Portland Visitors Association, Oregon Tourism Commission, Portland Rose Festival, Portland Development Commission, your local Business Journal, etc. Consider joining a committee at your Chamber of Commerce.

quote:

Originally posted by Markee:
We did a lot of research before getting into this business. We did not create a business plan. We just did our interpretation of how it should be done and ran with it. This is not the first time I've done this with a business. It may sound stupid the way we go about new businesses but it works for us more times than not. This one just happens to be in the "not" category at the moment. But I do believe we have the ability to change that.

As for growing to fast. That's a good observation. I agree with it.

Dean, You mention having a sales person out making calls M-F. Can you give a little advise on what is working well for you in this area? We do make some sales calls but I think we have room to improve in this area. For the web sites you mention. I'll check those out.

Salicete and TXLimoGuy, I do agree with getting rid of non profitable vehicles. I have wanted to wait though to get through a full prom season with all of the cars first though before making and changes in that area. I am hoping we can have all of the cars rented out for every prom. We have already had another limo company in town offer to guarantee a booking on all of our cars for proms if we wanted to agree to reserve the cars for them. So far we have not agreed to that. I take it as an indication that they are very sure there will be a demand for all of them.

We are in the Qwest Yellow pages and those just came out. We are getting calls from our ad. We also have a full page ad in the metro area gay yellow pages. Our area has a very active gay community and from previous local businesses we have had we found that a little support and respect goes a very long way.

John Sinibaldi, We will see you at the next city meeting. We looked this up and will be going to find out what is going on with the Airport regulations and the possible new regulations that are on the way for the city. On a scary note when we spoke with them they mentioned that they will be looking at the super stretches and our 37' Hummer may exceed what they allow. Ouch!

Another thought from some of these replies. I need to get someone on the team (or as in the book "Good to Great" I need to get the right person on the bus) that has management experience in the livery industry. So I'm working on that.

BTW: I'd like to mention that we did get a very good quote from Phil. My COO is working on the details but it looks like he may have been able to shave 20 to 25% from our annual cost. I'll follow up on this when we have completed any changes on this and let you know how this went.

marke I never heard of anyone starting a busines with out a plan. you are brave lol. you wwere lucky to even get a loan, dang. i dont think no bank in chicago would have gave you the $
you says you start one new busines every year. why do you do that?
your only a ex bus driver but you buildt this company up like you are donald trump lol. my doc told me he couldnt even get finansing like that lol, you are good with banks lol
i posted the link to youre case on another message board. i hop you dont mind but i think lots of people can learn some thing.

We did a lot of research before getting into this business. We did not create a business plan. We just did our interpretation of how it should be done and ran with it. This is not the first time I've done this with a business. It may sound stupid the way we go about new businesses but it works for us more times than not. This one just happens to be in the "not" category at the moment. But I do believe we have the ability to change that.

As for growing to fast. That's a good observation. I agree with it.

Dean, You mention having a sales person out making calls M-F. Can you give a little advise on what is working well for you in this area? We do make some sales calls but I think we have room to improve in this area. For the web sites you mention. I'll check those out.

Salicete and TXLimoGuy, I do agree with getting rid of non profitable vehicles. I have wanted to wait though to get through a full prom season with all of the cars first though before making and changes in that area. I am hoping we can have all of the cars rented out for every prom. We have already had another limo company in town offer to guarantee a booking on all of our cars for proms if we wanted to agree to reserve the cars for them. So far we have not agreed to that. I take it as an indication that they are very sure there will be a demand for all of them.

We are in the Qwest Yellow pages and those just came out. We are getting calls from our ad. We also have a full page ad in the metro area gay yellow pages. Our area has a very active gay community and from previous local businesses we have had we found that a little support and respect goes a very long way.

John Sinibaldi, We will see you at the next city meeting. We looked this up and will be going to find out what is going on with the Airport regulations and the possible new regulations that are on the way for the city. On a scary note when we spoke with them they mentioned that they will be looking at the super stretches and our 37' Hummer may exceed what they allow. Ouch!

Another thought from some of these replies. I need to get someone on the team (or as in the book "Good to Great" I need to get the right person on the bus) that has management experience in the livery industry. So I'm working on that.

BTW: I'd like to mention that we did get a very good quote from Phil. My COO is working on the details but it looks like he may have been able to shave 20 to 25% from our annual cost. I'll follow up on this when we have completed any changes on this and let you know how this went.

I was not going to comment, after all, I am new operator myself, but I decided to chime in since I have a few thoughts from the standpoint of a fledgling limousine business operator.

Shedding yourself of unprofitable vehicles, if you decide that is what you need to do after you run the numbers, is not necessarily a step backwards for your business.

Businesses retool and change equipment every day. I see lots of operators that measure success by how many vehicles they have tucked away on their lots, but vehicle count often means little.

It always makes me chuckle when I go to gatherings where lots of operators are present. 9 out of 10 times you will hear "we are up to 19 vehicles...etc etc etc," instead of "we cleared $90K last year." Too many people think it is all about the cars, and it is not; it is about the bottom line, the money,

I would rather be the shop making $18,000 a month on three cars than the guy making $16,000 a month on 12 cars.

Have a livery-industry professional review your operation and see if you need to retool. Selling a car or two could make all the difference. In the end you could well make more with less.

Whatever you do, I wish you good luck and hope your get into and stay in the green.

Don't want to pile on, but sorry I am not going to cry along with you.

Before purchasing any vehicle you must understand the total cost of ownership and crunch the numbers based on estimated hours of rentals to see if it makes sense.

This means you must know the insurance implications of adding a vehicle to the fleet before you sign the sales slip on the car or bus.

If the numbers don't make sense it is pointless to add the vehicle. If the numbers seem to make sense but after a year you are not making your projected rental hours then sell the car.

One of the most important things I was taught by veterans here from day one is that this is not a business of being in love with a certain vehicle.

The vehicles are here to make money for your business. If that is not happening analyze changes you can make quickly (ie different marketing tactics) or else sell them before they bleed you dry. Shift strategies and invest in vehicles which work for your business if needed. I liked the big SUV limos from my first show, but didn't buy my first Hummer until vehicle #12 in my third year of operation when I knew I had the bookings coming in to support it.

The other thing that is true that several here have pointed out is that start up companies are simply going to be penalized on insurance rates for $5 million policies because you have no track record. Establish a 2-3 year record of safety on <15 pax vehicles and then go for the $5 million buses. You will get much more favorable rates and the venture may then work.

The road is littered with those who bought too many cars too fast and held on to those money losing assets too long.

Two companies is a good idea. I enjoy reading your limo blog. My questions are: How much time did you put into a business plan prior to purchasing the cars ? Currently do you have a sales rep making calls Monday-Friday ? Are you running any weekday promotions to get your name out ? Any radio advertising ? Are you working with the Association of Executive & Administrative Professionals ? www.theaeap.com How about NALS ? www.nals.org WHAT ARE YOU DOING DAILY TO CREATE BUSINESS ?

quote:

Originally posted by Markee:
We have 5 cars and my insurance is $42,000 a year. I know you'll cry right along with me that this is outrageous. Let me lay a few facts down here. I have 5 cars. 3 are 18 - 22 passenger. 2 are 8 passenger.

To comply with federal law the cars with 16+ are required to have 5 million coverage. Adding 4 million on top of the normal 1 million adds $4000 per year per car.

The base rate to have the cars covered for damage and the 1 million the federal law requires comes out to about $22,000 per year. That's not to bad. What kills me is the extra $4,000 per car to get them to the 5 million coverage that is required for our cars that are technically busses because of how many passengers they hold.

So here's the math. 22k plus 3 bus size cars at 4k each. That's 34k. So why am I saying that my insurance is 42k!?!

My insurance company is requiring me to cover all of the cars up to 5 million total. So my two cars that only require 1 million in coverage I'm being forced to cover them at 5 million. They refuse to take this off!

I'm really pissed off about this. We are being 100% legal and making every effort to do so even though my competition is not. Now this extra forced insurance is just adding insult to injury.

The only option they offer me is for me to split my fleet into two companies. They tell me that if I open a second LLC, get a second EIN and split the billing on the cars to the small cars in one company and the big cars in the other I can then get out of paying this extra 4k per small car.

Does anyone think this is bullshit or have any good suggestions?

I do have quotes pending from other companies. But so far it looks like the others are going to treat this the same way.

Suggestions?

quote:

Originally posted by Markee:
We have 5 cars and my insurance is $42,000 a year. I know you'll cry right along with me that this is outrageous. Let me lay a few facts down here. I have 5 cars. 3 are 18 - 22 passenger. 2 are 8 passenger.

To comply with federal law the cars with 16+ are required to have 5 million coverage. Adding 4 million on top of the normal 1 million adds $4000 per year per car.

The base rate to have the cars covered for damage and the 1 million the federal law requires comes out to about $22,000 per year. That's not to bad. What kills me is the extra $4,000 per car to get them to the 5 million coverage that is required for our cars that are technically busses because of how many passengers they hold.

So here's the math. 22k plus 3 bus size cars at 4k each. That's 34k. So why am I saying that my insurance is 42k!?!

My insurance company is requiring me to cover all of the cars up to 5 million total. So my two cars that only require 1 million in coverage I'm being forced to cover them at 5 million. They refuse to take this off!

I'm really pissed off about this. We are being 100% legal and making every effort to do so even though my competition is not. Now this extra forced insurance is just adding insult to injury.

The only option they offer me is for me to split my fleet into two companies. They tell me that if I open a second LLC, get a second EIN and split the billing on the cars to the small cars in one company and the big cars in the other I can then get out of paying this extra 4k per small car.

Does anyone think this is bullshit or have any good suggestions?

I do have quotes pending from other companies. But so far it looks like the others are going to treat this the same way.

Suggestions?

http://limos.infopop.cc/eve/forums/a/tpc/f/1896007732/m...201081613#8201081613

This case is interesting. I been talking to a guy who has been in the biz for 25 years and says this case is textbook..growing to fast with out a clear plan. I went back an read the old posts. It seems like to me the insurance and financing was a problem from the begining. from what I been reading in the posts from a year back you didnt have business plan.

Did you ask other people for advise when you started your business? you spent so much money on cars and insurance i'm thinking you kind of should hire a profesional adviser. hiring a business adviser isnt to expencive compared to all the $$ you already spent if it could save your business, dont cut corners now

i seen the limonster.com vids and your youtube vids so I know you sent a bundle on this biz

I agree with my Northwest brothers.

After 14 years in business, this is the first year that we even considered and are getting a 20 Pass 2008 Escalade Limo.

You have to build your fleet one car at a time.

Markee, I suggest jumping into the sedan business if you want to see you car moving everyday. That is my bread and butter for 7 days a week. Limos in the northwest are used mainly on Saturdays and one other day a week.

quote:

Originally posted by John Sinibaldi:
The problem in Portland, is you have a lot of operators with large vehicles who lied to their insurance company on the passenger size of thier vheicle and do not have CDL for their drivers and are not register with ODOT "State".

In regards to insurance, this is material misrepresentation. Fraud, and thus possibly no coverage.

I have been in the busines since 1994. I do agree with Cliff that you grew to fast. I made the same mistake several years ago. You might want to consider dropping 1-2 vehicles unless you can get more business.

I serve both the Salem and Portlnd Market. I have never been in the Super Limo market. In Salem where I live, with have 4 companies that run a total of 7 large vehicles. The population in Salem is 105k. We have one company that charges $97.00 including the tip to run his hummer.

We run sedan, limos and vans. We are under DOT.
A question I have for you, are you running your rigs up to Seattle Tacoma area? If so, anything over the 15 passengers do require a min of 5m insurance. In Oregon and Vancouver area, ODOT would require a min of 750K. However, I consider this to be a low amount.

The problem in Portland, is you have a lot of operators with large vehicles who lied to their insurance company on the passenger size of their vheicles and do not have CDL for their drivers and are not register with ODOT "State".

I will tell you, that the City of Portland will soon begin to regulate Limos, Super Limos, SUV's in the near future. I have been working with commitees for the City for a long time. However, we are now forming a Limousine association. Many of us who operate legal companies don't necessary belive the City knows what they are doing all the time. There is to much influence from the Cab industry. We don't want to be consider a Cab company. You might want to consider joing the assoication. We will soon begin operations.

Please feel free to call me, I would be happy to discuss some options with you concerning your insurance and the DOT/ ODOT issues.

Just for the record, my insurance for 8 vehicles for 2m is about 24k. Since I am a Federal Charter, I can possibly assist you with information to help cut your cost.

Your Problem is you Moved to fast into the Market and were not profitable in the beginning to handle the additional expenses of additional Vehicles and all the related costs.

It took me two years to Justify 4 Limousines and to have them pay for themselves. I also did not take a red cent for myself the First year and a half.

Perhaps you might consider getting out of the buss business and into more traditional 14 passenger Limos or less.

As to your Competitors Locally Had you done your research in the beginning you would have learned as i did that there are some 47 companies locally within a 50 mile radius coming to something like 45 stretch Limos with a Capacity of 14 or less, there are about 7 limousines in town with a True Capacity of 18 to 24 which are 200 to 240 inch stretches.There are 15 Party Buss's with a Capacity of 14 to 35 and at least 8 True Buss Companies who run their rigs for a meager $3.65 a Mile and they run about $12 to 14,000 a year in insurance, do the Math.

This Market is Packed with companies and most have One to two vehicles and are Mom and pop operations. Not to mention those who cal themselves Limousine companies and don't even own a stretch or Lincoln Sedan but focus on the Hotel Business and Airport work in SUV's.

Indeed there are some in town who are Not Legal as there are in every town in the Nation. Unfortunately Portland Does not regulate Stretch Limos which would be fine with me for it would indeed weed out some of the fly by nights and those who are charging cut rates attempting to draw business rather than keeping their rates up and focusing upon service and quality which is lacking in this town.

I can name perhaps 5 to 7 companies who have such a quality service and operation here in Portland.

Unlike you i chose not to get into the Big Super Stretches because of the Insurance requirements and lack of Market for that size Vehicle and the cost factor when you drill the Numbers you pay in excess of $120,000 for the Vehicle and depending on your down payment which should be 20% at a Minimum the payments are still $2250 or more and on top of that the Insurance as you say is so steep you need to run it almost daily to turn a true profit. Just not enough weekly business here to justify that kind of vehicle.

In my Opinion you simply moved to fast thinking well More Limousines More Business Potential and while that might seem to be a reasonable thought without corporate Business or Sedans to supplement your Income you are in a No win situation simply focusing on such super stretches.

There are companies in town renting their brand New 165 inch stretch Hummers for $100 or less because like you they cant keep them booked and make the payments and related costs. It happens all the time. Folks Make financial decisions without having the business to back it up betting on {the come}, instead of having the business base already then adding to their fleet to capture the sales.

Without a serious rethink you may well go by the wayside and have to refocus on your software business to dig your way out of the hole you have dug for yourself unfortunately.

Open up another corporation under another name. Put all 16+ vehicles under that, and get the $5 million coverage. Other vehicles keep it at the $1 million requirement.
Will result in initial headaches in registering the cars, transferring, etc., but you might save a few thousand dollars.

quote:

Originally posted by Markee:

quote:

Originally posted by Limo Insurance King:
This means that the 16 pax you have is carrying the same limits as the motorcoach carrying 55 people.

It sure would be nice to have some sort of sliding scale. I just don't see any reform on this at the moment though. The Federal DOT is still trying to get all of the states to comply. I'm in Oregon where our state does not yet comply. We've just chosen to follow the federal standard.

If the NLA could do something about this I would support it.

BTW: IMO 7 passengers at 1.5mm I think is a little low on coverage. Any bad accident where you have 7 people injured in your car will most likely cost you your business because they will go through the 1.5mm quickly. I know of one instance where a driver hit a child and they had 2mm coverage. They went through that and then attacked his assets until he claimed bankruptcy.

It only takes one mistake and *Poof*

Markee realistically nobody can ever have "enough" insurance to cover all possibilities. We all face risks in a free and open society.

I have

4 2008 Suburbans (they consider them shuttles)
1 2002 Linclon Town car
1 2001 10 pack
1 2003 10 pack
16 Passenger Excursion
14 passenger Navigator
20 Passenger H2
22 Passenger Escalade

I pay $34000 per year with Empire