Taxi drivers travel many miles every day and encounter a variety of people, which is why your insurance policies need to cater for all eventualities. You never know what you might face and you don’t want to have financial uncertainty if your car is involved in an incident. It can also be emotionally draining to deal with compensation claims or repair costs, especially if you are unable to work.
Insurance is a legal requirement for anyone driving on the road, but taxi insurance has some differences to personal car insurance due to the nature of the vehicles. You are likely to deal with high volumes of people and drive across a large area, which puts you and your taxi at a higher risk of being involved in an accident.
Taxi insurance is different to standard motor insurance. It’s crucial that you have the correct cover for your working vehicle. Taxis are used for different purposes than a standard car, which is why taxis come with their own risks.
In this article, we’ll take a look at what is included in taxi insurance and why it is a necessity, whether you are an independent taxi driver or run a taxi business. We will help you to understand the difference between taxi and car insurance, as well as ways that you can lower your insurance premium.
What does taxi insurance cover?
Taxi insurance is used to cover vehicles used for commercial hire. This includes taxis run by a company, private hire cars and other platform-based services such as Uber. Standard car insurance doesn’t offer enough coverage to protect you against the added miles that you will drive or the customers that you deal with as a taxi driver.
Insurance can cover you if you are involved in any accidents as it will help with compensation and medical bills. It can also offer financial security should your car need repairs or if the vehicle gets stolen.
Continue reading to find out more information on the different aspects of taxi insurance.
What are the different types of taxi insurance?
It is a legal requirement for all taxis to have a minimum level of insurance. This is so that all repairs and medical expenses are covered should there be an accident. Insurance acts as added security when you are driving your taxi because you won’t be faced with high financial costs should the worst happen.
There are three levels of insurance that taxi drivers can get. They range from minimum cover to offering a wider range of protection. Below is an outline of what you can expect from each category.
Third-Party Only Taxi Insurance
This is the minimum level of cover that you must buy when driving a taxi. It protects members of the public and other motorists if they are involved in a collision that was not the taxi driver’s fault.
Third-Party Only insurance can seem like the best option as it’s the cheapest. However, it doesn’t cover you against all eventualities and therefore may end up costing you more money in the long run, especially if you are faced with expensive pay-outs following an incident.
Third-Party, Fire and Theft Taxi Insurance
As the name suggests, this type of insurance also covers third parties, alongside extra cover. You will be covered if your taxi is damaged due to fire and parts need replacing. This type of insurance also covers you if your vehicle is stolen. Losing your taxi will have a massive financial impact, especially if the car is your only source of income. Buying insurance is the only way to ensure that you are protected and won’t have to pay out large chunks of money if something happens to your car.
Fully Comprehensive Taxi Insurance
This type of cover is the most popular because it offers more protection. As well as covering third-party claims, vehicle damage due to fire and stolen taxis, it also covers accidental damage done to your taxi too. Fully Comprehensive insurance can give you peace of mind knowing that you are covered in a variety of different situations.
Taxi licenses
You will also need to apply for a taxi license before you are legally allowed to run your business. You will need this license so that you can purchase taxi insurance. Below is a summary of the two types of taxi license.
Public Hire Taxi Insurance – Public hire cars can be flagged down on the street or from a taxi rank. This means that customers don’t have to make a prior booking before using them. These types of taxis sometimes show signs on the vehicle to indicate whether they are available to customers or already occupied.
Private Hire Taxi Insurance – Private hire taxis can only take customers that have pre-booked and will therefore not cover cars that pick up customers without prior arrangement through a booking system. For example, you may offer booking through a company website or over the phone. Standard car insurance becomes invalid if you are driving a paying customer. For this reason, private hire taxi drivers need to make sure that they are properly covered.
Do I need taxi insurance?
You will need taxi insurance if you are running a business where you drive paying customers in your car. Taxi insurance is different from standard car insurance because you will cover substantially more mileage than the average motorist, as well as deal with members of the public.
You can apply for taxi insurance if you have a taxi license and have had a full driving licence for over 12 months. You may also find that there are age restrictions, depending on which policy you want to purchase. This is because younger drivers are less experienced and are more likely to be involved in an accident.
A short-term taxi insurance policy is available for people that only drive taxis part-time. This means that you don’t have to take out a full policy as you can specify the number of weeks that you need the insurance for. It can work out cheaper than getting annual insurance.
Along with taxi insurance, you will also need business insurance if you run your own company. You may also need taxi liability insurance if you work with a local council or authority and have a contract with them. Public liability insurance is designed to protect you should a passenger or member of the public get injured as a result of your driving.
How can I lower the cost of my taxi insurance?
Running a business can be very costly, which is why you will want to keep down your taxi insurance costs. Luckily, there are several ways that you can lower your insurance premiums whilst keeping the same level of cover.
You can implement a driver training programme to ensure that your drivers are capable of minimising risks and maintaining a safe level of driving. This will reduce the danger of accidents which means that you will have a better claims history and can get a cheaper policy.
Your company should also have a policy that requires your drivers to notify you of any motoring penalties. Drivers with points on their licence are more expensive to insure because statistics show that people with motoring penalties are more likely to re-offend. You should also make sure to regularly check the taxi licenses of your cars to make sure that they are up to date and legally allow your taxi to carry out services.
Adding security cameras to your vehicles can also help to lower the cost of your taxi insurance. This is because you will have evidence of your actions should you be blamed for an incident that wasn’t your fault. Another good security measure is to keep your vehicles in locked facilities as this reduces the risk that they will be stolen.
Summary
All taxi drivers are legally required to get taxi insurance. The minimum level of cover is Third-Party insurance, which covers you if a member of the public makes a claim against you. Alternatively, you can also purchase Third-Party, Fire and Theft Taxi insurance, which will cover you against third parties, as well as damage caused by fire. Your vehicle will also be covered if it is stolen.
Comprehensive cover is the most popular form because it protects against damage and medical claims made whether an incident is your fault or not. This level of cover can work out as the best value for money because you are protected against virtually any issue.
You might also want to buy a type of any-driver additional cover if you run a large business. This policy allows named drivers to drive any car in your fleet, which is helpful if your drivers are likely to swap cars.
Taxi companies that are contracted by a local council or local authority are also required to have public liability cover. It will protect you if a passenger makes a compensation claim against you if they are injured in some way due to your actions.
FAQs
What is the difference between taxi and car insurance?
All cars that drive on public roads are legally required to have insurance. Whilst you may think that a standard car insurance policy will do, this is not the case. Taxis are exposed to different risks compared to the average car. You will cover significantly more distance in a taxi, which means that you will be exposed to busy traffic and potentially stressful situations on a regular basis, which could cause accidents. Taxi drivers are also prone to driving unsociable hours, unlike most personal cars, which can lead to more accidents.
Driving members of the public also comes with its own set of risks, which are reflected taxi insurance policies. You are responsible for your passengers’ safety, which means that you could be faced with compensation claims if they are injured whilst in your vehicle.
Standard car insurance is generally used for vehicles driven for personal use, which means that the cover will work out much cheaper than taxi insurance. The average car won’t face the same risk factors that taxis do due to the distances and frequency that the vehicles are driven. Taxis (especially minicabs) also tend to be bigger vehicles, which places them in a higher and therefore more expensive insurance group.
Taxi insurance allows you to use the vehicle for domestic and leisure purposes as well as work.
Can I insure multiple taxis under the same policy?
You can insure multiple vehicles by using a form of taxi fleet insurance. This is the option that most business owners opt for as it can work out cheaper and means that they only renew one policy, rather than several. It can cover taxis of various models and sizes at whatever level of insurance you want – be that Fully Comprehensive, Third-Party Only or Third-Party, Fire and Theft.
Some companies also want to purchase Any Driver cover. This means that they can list the names of their employees on the cars’ insurance policies, which will allow them to drive each vehicle.
Also read:
Taxi insurance brokers
Taxi Fleet Insurance: Q&A
How do I get a taxi insurance quote?
Taxi insurance – why you need bespoke cover