Saturday, June 06, 2020

A Guide to Choosing the Right Taxi Insurance

by Editor (editor) , January 17, 2019

Public hire taxis are most frequently seen in city centres and busy areas.

Driving a taxi for a living can be a lucrative and rewarding career choice. Although there are risks of difficult customers and potentially dangerous roads, it is still a hugely popular profession, made all the more profitable with the introduction of ride share and app-order businesses like Uber and Lyft.

Whether you work in the city or in a small village, your taxi service is an integral part of many people’s lives. To keep both yourself and your customers safe, you need to have adequate taxi insurance in place.

Private or Public?

When it comes to finding the right taxi insurance, you need to work out which type of taxi you have. Private hire taxis are only able to be booked in advance and cannot pick up passengers from the side of the road without prior booking. They will not have a lit ‘taxi’ sign and often work with executive clients who take regular journeys. Private hire refers to Uber and minicabs, among other types of taxi firm.

Public hire taxis, like London’s black cabs, will not be pre-booked and can be hailed from the side of the road as and when they are needed. They will display the lit ‘taxi’ sign and will often be used for shorter journeys. Public hire taxis are most frequently seen in city centres and busy areas.

Once you know which type of taxi business you work for, you can start to look at the differences in insurance coverage.

Types of Taxi Insurance

There are some general features that all taxi drivers should include as part of their insurance policy, regardless of whether they are public or private hire. There are three types of insurance to choose from:

  • Third party (TPO)

This is the lowest minimum cover you must legally have in the UK. It will cover the cost of damage to a third-party vehicle in the event of an accident. However, it does not cover the cost of repairing damage to your own vehicle, meaning it will come out of your pocket. The costs associated with repairing your taxi could be astronomical, depending on the damage, so this low level of cover is probably not enough.

  • Third party, fire & theft (TPFT)

This is one step up from TPO and gives greater coverage by paying out for both damage to the third-party vehicle, but also your own in the event of fire damage or the theft of your car. Although it is recommended to have further extended coverage, this could be enough depending on the nature of your business.

  • Comprehensive

Comprehensive cover is highly advised for both public and private hire taxis because of the breadth of cover you are able to purchase. Taxi drivers are able to create a bespoke policy that includes features that will fully encompass the many situations that can arise during the day-to-day running of the taxi business. It is important to understand all the elements that you will need to insure – including the driver, the vehicle, the passengers, and the potential for other road users to cause damage.

Taxi Insurance Policy Features

There are a number of features you should consider as part of your overall comprehensive taxi insurance policy. Let’s take a look at the categories to consider and pertaining suggested features.

The Car

The vehicle you drive is an integral influencer to the price you pay for your insurance. Cars come in insurance categories ranging from 1-50, so driving a vehicle that is part of one of cheaper categories is advisable. Although this is not possible for some public hire taxi drivers, such as those who drive Hackney carriages, some people will be able to select a car that costs them less.

Insurance costs are worked out by the risks presented to the broker. A car that statistically gets into more accidents than others will therefore cost more to insure. Sometimes, it doesn’t matter how safely you drive – a safe driver in a Porsche will still always pay more than an unsafe driver in a Kia.

Some suggested features pertaining to your car include:

  • Breakdown Cover Breaking down is never an ideal situation, even less so when you have a passenger, or you are on your way to or from their location. With breakdown cover, the costs of roadside assistance are covered, meaning you only need to focus on getting back on the road
  • Courtesy Car Cover If you break down or your car is damaged to the point that it cannot be driven, you will need a courtesy car, so you can continue to work and therefore make an income. Paying out for your own car during the time yours is being fixed can be extremely expensive, particularly if you use the same car for personal use
  • Personal Use Cover Leading on from the last point, personal use of your taxi requires its own type of cover. There are fewer risks for standard driving than taxi driving, mainly because you are not picking up passengers and you’re on the road less often in your personal time

The Driver & Passenger

Whether you are a taxi driver, or you own a taxi firm, it is important that whoever drives the car is insured to do so. If you work for Uber or Lyft, you will be driving your own car. However, there are some firms that share cars, in which case you need to make sure all your drivers are insured.

It can be a bit of a slog trying to insure everyone who works for you under separate policies, so we would recommend insuring all your drivers under one. This is something you can chat to your broker about as and when you start searching for quotes.

Some driver-related insurance features to consider are:

  • Any Driver Cover As we mentioned above, if you own a fleet of taxis whereby the cars are sometimes shared or drivers change regularly, you need any driver insurance to make sure they are legally able to drive any car at any time. You can cover multiple drivers for the same vehicle. Although this can be expensive, it will be cheaper than the costs of fighting in court if you break the law
  • Public Liability Insurance In the event of a court case that results from an accident, public liability cover can mitigate the costs. For example, if you get into an accident and a passenger or pedestrian is injured or their property is damaged, they are within their rights to make a claim against you, which means medical, compensation and legal costs could easily mount up. With public liability insurance, these costs will be paid
  • Employers’ Liability Insurance If you own the taxi firm itself and manage a fleet of drivers, you will need to have employers’ liability insurance by law. In the same way public liability insurance covers members of the public, employers’ liability covers your employees. They may be injured in an accident and left unable to work, or a fault with one of the cars may have gone unnoticed and led to injury – in either case they can make a claim against you which could cost you significantly. If you do not have this type of cover in place you could be fined up to £2500 per day.

Finding the Right Quote

The most important part of finding the right taxi insurance is to shop around. Some brokers offer different things as standard with their packages, so don’t accept the first quote you are given.

Try and search out specialist insurers who understand the unique risks you face as a taxi driver or owner of a taxi business. Also, there is always the risk of being over- or under-insured and getting a bespoke comprehensive policy will guarantee you are paying for the features you really need.

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