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Taxi Insurance Guide: What You Need to Know
Driving a taxi carries a certain level of risk. Your car is your income, so it’s important to do everything possible to protect you and your car with the right type of insurance. As a taxi driver, you’ll need a specific type of coverage called taxi insurance.
What is Taxi Insurance?
Taxi insurance is a specific type of insurance that covers both the taxi driver, their passengers and the car they use. As a taxi driver, you’ll need to understand that regular car insurance will not protect you, your car or your passengers in case of an accident. And you’re legally required to have taxi insurance if you make a living driving a taxi.
There are specific types of taxi insurance, depending on the type of service you provide:
- Private hire taxis: these taxis provide a pre-booked service, meaning they’re hired in advance. This type of service includes minicabs and multipurpose vehicle (MPV) taxis.
- Public hire taxis: can be hailed by a customer at the moment (they’re not booked in advance)
You cannot drive without taxi insurance coverage—it is your responsibility to yourself and your passengers to have the right type and level of coverage.
Who Can Apply for Taxi Insurance?
You can get taxi insurance coverage if you:
- Have had UK residence for at least 5 years
- Have had a valid driver’s license for at least 3 years
- Work as a taxi driver full time (and have no other jobs)
- Are 21 years old, though some policies will only cover taxi drivers 25 years and older
- Have had your taxi badge for at least 12 months
The eligibility criteria will vary from policy to policy, so be sure to thoroughly read through the policy before completing an application.
What Type of Coverage Do You Need?
Similar to regular car insurance, taxi insurance has three standard levels of protection:
- Comprehensive: this is the highest level of protection, and covers damage to your taxi, as well as the third party in case you’re at fault in an accident. It also provides protection against damage from vandals and more.
- Third-party, fire and theft cover only third party in the event of an accident, meaning that the other party’s vehicle, their passengers and the passengers in your taxi will be covered. Your vehicle will not be covered by the policy. However, it will be covered from fire damage or if it’s stolen, but never recovered.
- Third-party: only offers the legal minimum and will only protect the other parties and their cars in the event of an accident where you are at fault. This type of protection will not cover damage to your taxi.
There are also addons you can get with your taxi insurance, including:
Public liability insurance: covers you if a passenger suffers property damage or personal injury in your vehicle. This add-on covers legal or compensation claims that result from these occurrences.
Personal use cover: you’ll want this addon if you plan to use your taxi when not working. Another thing to consider—this may or may not cover your partner if they use the vehicle. Be sure to read the policy thoroughly for this information.
Unlimited mileage: this coverage may be worth the cost if you drive a large number of miles each year. It will keep you from being charged for driving too many miles. The best thing to do is figure out your average miles driven in a year. If you drive over the average number of miles, this addon may be worth the cost.
Why is Taxi Insurance Expensive?
Taxi insurance can be expensive—why? Taxi drivers generally spend more time on the road, putting them at greater risk for an accident. In other words, more time spent on the road, the higher the chance of having an accident.
Not only that, but insurance also has to cover your passengers in the event of injury, lawsuits, etc. And you’ll also want to make sure your vehicle is completely covered.
These are the reasons taxi insurance is more expensive than regular car insurance.
Just like regular car insurance, you can find policies that allow you to pay annually or monthly. However, monthly premiums are generally more expensive.
While cheap taxi insurance can seem like a good deal, it may not provide the best value overall. You don’t want to find yourself in a situation where you need to make a claim, but find that the insurance doesn’t cover the claim, and you have to pay out of pocket. This can be quite expensive, so it’s usually worth the cost of buying the best coverage you can afford.
Another issue to be aware of is that standard car insurance that includes a “business use” clause, will not cover using your vehicle as a taxi. You must have taxi insurance, as required by law.
Tips to Keep Taxi Insurance Costs Down
Here are some ways you can save money on your taxi insurance:
1). Choose to pay annually—this will save you more money, as monthly premiums are more expensive.
2). Install security measures such as a CCTV or Thatcham to help lower your premiums. Before installing, check your policy to see if adding these security measures will lower your premium.
3). Drive safely and obey traffic laws to keep premiums lower. Every penalty for speeding will increase your rates, and you could even lose your operating license.
4). Estimate your annual mileage and make sure this is an accurate figure. The more you drive, the more insurance rates can go up. Keeping mileage low can make premiums cheaper.
5). Buy taxi insurance from companies that specialize in this type of insurance. They’ll have a better understanding of your business than a general insurance company.
6). Don’t be afraid to do a price comparison when shopping for taxi insurance. Find the best taxi insurance provider with the best price. Keep in mind that each insurance company uses a different risk factor calculation to determine the amount of risk you may pose. As a result, prices will vary from company to company, so it pays to find the best price for the coverage you need.
Taxi insurance is a legal requirement and one you don’t want to be without. Use the tips in this guide to find the best insurance for a price you can afford.