Starting your own chauffeur company may seem like a cushy life, but as anyone who is in this business will tell you, getting started is a demanding and costly process. Insurance, vehicle costs and licensing can be expensive, and you will need to ensure that you can keep your services competitive. There are many different types of chauffeur companies, so the first step should be to look at what kind of services you want to offer because this will determine many of your upfront costs.
Types of Chauffeur Companies
Before you start your chauffeur business, you will need to decide what types of chauffeur services you plan to offer. Each of these questions will likely affect your operational costs, specifically in licensing and insurance. For example, do you plan to use your own vehicle or offer your services to people and companies with their own vehicles? Other questions include:
- What type of vehicle will you use?
- What is the vehicle's weight and occupancy?
- Do you plan to hire other drivers in your first year?
- Do you plan to offer airport limo services?
- Do you plan to work for only one customer or company?
- Will you offer wedding or other special event limo services?
Once you have the answers to these questions, you can then look at what licensing requirements you will need from your state and city as well as what types of insurance you will need. These costs in addition to the cost of your vehicle, fuel and vehicle storage will help you determine how much you should be charging for your services. Then, you can compare these charges to what other chauffeur companies charge.
Licensing Your Business
Many states have updated their laws in recent years, particularly after the launch of Uber and other ride-sharing smartphone apps. In Michigan, for example, you don't usually need a chauffeur's license to become a chauffeur. Depending on the types of services you offer, your personal drivers' license and a copy of your driving record may be fine.
In California, your business will likely fall under the category of charter-party carriers. In this case, the application fee is $1,500 (nonrefundable), and you will need proof of insurance and your business papers for your LLC, LP or corporation. If you have your own vehicle, it should be registered as a commercial vehicle with the state before applying for your license. If you plan to pick up fares at airports or if you plan to drive a modified limo, additional paperwork and fees may be required.
Regardless of where you live, the best course of action will be to contact the state licensing body responsible and ask them what is currently required. In Michigan, for example, this would be the Department of Licensing and Regulatory Affairs. In California, it is the Public Utilities Commission.
Chauffeur Insurance Requirements
In addition to the cost of your vehicle and fuel, you will need to consider the cost of insurance. Even if you don't own a vehicle, you will still need insurance before you can drive passengers, and as the CPUC points out, the premiums are often more expensive than if you owned your own vehicle.
As with any vehicle insurance, the cost depends on your coverage amounts, deductibles, the type of vehicle you have, your driving history and where you are located. For a chauffeur business, the types of fares or contracts you will be taking and the number of years of experience you have as a commercial driver are added to this.
Brace yourself before getting quotes and make sure you contact at least three insurance companies before signing up. The cost of limousine insurance, for example, could be $10,000 per year or more. In addition to vehicle insurance, you will also need public liability and property damage insurance.
- Bureau of Labor Statistics: Taxi Drivers, Ride-Hailing Drivers and Chauffeurs
- The Chauffeur: Guide to Starting a Chauffeur Business
- Michigan Department of Licensing and Regulatory Affairs: Uber and Lyft Now Regulated Under New State Law
- California Public Utilities Commission: Licensing Requirements for Charter-Party Carriers
- Limousine Insurance HQ: Limo Insurance Cost
- Going above and beyond for your clients doesn't mean allowing them to break the law. Don't allow passengers under the age of 21 to drink alcoholic beverages in your vehicles.
- Be prepared to work evenings and weekends.
A published author, David Weedmark has advised businesses on technology, media and marketing for more than 20 years and used to teach computer science at Algonquin College. He is currently the owner of Mad Hat Labs, a web design and media consultancy business. David has written hundreds of articles for newspapers, magazines and websites including American Express, Samsung, Re/Max and the New York Times' About.com.