If you are thinking of taking up private hire taxi driving as a full-time occupation, or even just part-time to generate some additional income, you will need private hire taxi insurance to protect both you and your business.
When getting involved in the private hire taxi business you will need to adhere to certain rules and regulations. Failure to observe the correct procedures could land you in hot water with your local authority leading to fines and even a temporary suspension of your taxi licence, so it is essential to get everything right before you start out.
Why Do I Need Private Hire Taxi Insurance?
Private Hire Vehicle insurance (PHV) is different from standard car insurance as it is designed not just to protect you and your taxi, but also your passengers and any luggage or cargo you may be transporting.
As a private hire driver, you will be faced with far more challenges than the average road user. For starters, you will be spending longer hours on the road often through inner city areas or airport runs, so you will automatically be at greater risk of accidents. The type of vehicle you drive may also bring additional risks, particularly if it’s an MPV or minibus, where you will have additional passengers and luggage.
Together with coverage for you, your car, passengers and their luggage, there are some additional insurance extras to consider when starting your business. Before taking out any add-ons, particularly if money is tight initially, make sure you speak with an experienced insurance broker who can explain just what you need and what can be added at a later date.
What Type of Taxi Insurance Do I Need?
There are two main types of taxi insurance: private hire taxi insurance or public hire taxi insurance.
The difference between the two is that a public hire taxi can be hailed by customers on the street, such as London black cabs or hackney carriages. The cars or MPVs can display taxi signs and there is no need for any pre-booking. This type of insurance is geared towards covering you for picking up clientele from taxi ranks or the street without them having booked you in advance.
Private hire taxi insurance covers you for pre-booked journeys for vehicles such as cars and people carriers up to a maximum of eight passengers. People cannot be picked up from the street or taxi ranks and bookings are usually made by a link to radio control.
The benefits of private hire taxi driving are the flexibility of being able to choose how often you want to work, how far you want to travel and whether you want to work late nights or weekends – though this will be more lucrative for your business in the long run. If you want to avoid anti-social hours, taxi driving is probably not the right business for you.
Private Hire Vehicle Insurance Options
When looking at private hire taxi insurance options, there are some areas that are, like any motor insurance, a legal necessity. Other options can offer a greater level of flexibility. If you are driving your taxi for a living, you will need an experienced insurance broker such as Tradex to help you find the right level of cover for your needs.
Here are the main options:
Third party insurance: this is the absolute minimum cover you will legally need as a taxi driver, but third party generally isn’t recommended as the cover can be limited, particularly for you and your vehicle. If your taxi were to be involved in an accident which was deemed your fault, you would only be covered for third party liabilities which would include any damage caused to another person’s vehicle or property and the injury or death of third parties. In addition, there would also be cover for your passengers but not you or your taxi. This would be very costly if you were to be injured in the accident and unable to work or your car was off the road for a significant period of time.
Third party fire and theft: This will give you the cover mentioned above together with insurance if your taxi were to be damaged by fire or stolen.
Fully comprehensive: having the full level of cover is recommended if you own a taxi. Together with the cover mentioned already, you will also be insured for any damage to your taxi following a road traffic accident, whether your fault or not, and protected should you be injured. Fully comprehensive gives you the peace of mind that you and your business will be protected against any road incidents.
What Will I Need to Tell My Taxi Insurance Broker?
An insurance broker will ask you a variety of general questions including your age, driving experience, no claims history and any licence endorsements. In addition, you will need to be able to tell them the following:
Where you operate: you need to make sure your policy is tailored to the particular regions you will be driving in. The premium you pay will be different whether you drive in urban or rural areas, particularly if you will be doing inner city or airport driving.
Vehicle type: if you have a vehicle with more than the standard five seats, you may need a policy that is specifically designed for larger vehicles, such as if you are driving an MPV or minibus.
The number of vehicles: if you are thinking of operating more than one taxi or setting up a taxi fleet, you will probably find that taxi fleet insurance is a more economical option.
Do I Need Liability Insurance as Part of my Taxi Insurance?
One area that is important, if not essential, when picking up and transporting passengers is public liability insurance. This isn’t generally included as part of your private hire cab insurance policy, so it’s important to add it on to protect you and your business from any claims.
Private hire vehicle public liability insurance protects you from claims made by third parties for injuries to the person, or damage to property resulting from your business activities. This protects your business should a passenger be harmed in anyway whilst in your care.
Though not legally required, it’s strongly advised that public liability insurance is taken out by taxi drivers. Most organisations will not work with taxi drivers who do not have liability cover, including local councils, local authorities and schools. Therefore, you could significantly reduce your chances of contract work if you do not have this cover in place.
If you are thinking of transporting children to school, it’s important that you are aware of your commitments to that child and the educational establishment. A taxi driver is legally liable for the child in their vehicle until they have been handed over to the school. This means that you are not just responsible for the child whilst they are in your taxi, but also during the period of time between leaving your taxi and them entering the school gates.
Therefore, you will need to escort them to safety. If a child were to become injured say crossing the road when leaving your taxi, you could find yourself liable for the injuries. If you have a contract with a school for transporting pupils, they may also have specific insurance requirements that will need to be fulfilled before you can work with them.
A typical public liability insurance policy will pay for the cost of putting right any damage to property or medical fees in the case of injury or an accident. It should also include the legal cost of representing your business, related expenses and any damages your business is found to owe in relation to a claim. A private hire taxi insurance policy from Tradex offers public liability cover up to £10 million.
If you have employees as part of your taxi business, you will need employer’s liability insurance as a legal requirement. If you are intending to have a fleet of taxis, this will be included in your taxi fleet insurance policy. This will protect you against accident claims at work and compensation claims against your company.
What Additional Taxi Cover is Recommended?
Taxi breakdown cover: If not already part of your policy, this is recommended to be added to your taxi insurance cover to make sure you stay on the road as much as possible. The policy should include home start as well as local roadside assistance and recovery. As a taxi driver you may also want to request cover for separate onward travel to get your passengers to their destination.
Named driver policy: if you own your own taxi and are the only driver, a named driver policy is likely to be the most economical option on your taxi insurance policy. If you own more than one taxi, then it is worth looking at an all-driver policy, but this will be a more expensive option.
Unlimited mileage: this will help to prevent you being charged for driving too many miles over a set amount. If you drive long distances, this may work out as a more reasonable option and prevent any concerns about going over your mileage allowance, which could result in your insurance policy being invalidated if you need to make a claim following an accident. Keep a record of the mileage you do on an average month to figure out which is the best option for your business.
Personal use cover: as long as you are a registered taxi driver, you should be able to drive your car for domestic purposes. However, it is worthwhile checking with your local council as rules can differ. If you have a partner that wants to use the vehicle, you may need to look at personal use cover. It’s best to check with your taxi insurance broker to ensure you and your partner are covered to drive the vehicle outside of business hours.
Windscreen cover: as with most motor trade insurance, private hire taxi insurance includes cover for windscreens from minor chips to a full window replacement.
Key cover: there is nothing more infuriating than losing your keys or accidentally locking them in your vehicle. It can be costly as well as time-consuming to try and track down a locksmith to come and replace locks or help you gain access to your vehicle. Key cover including loss or damage to keys, locksmith charges and replacement locks can give peace of mind when you are in and out of your vehicle all day.
Miss-fuelling: whilst lost or damaged keys can be inconvenient, putting the wrong fuel in your vehicle is incredibly expensive and can be damaging to your vehicle if you turn the ignition before realising your mistake. According to the RAC, approximately 150,000 people put the wrong fuel in their vehicle every year. Having miss-fuelling cover means your vehicle can be drained and flushed often at the forecourt.
How Can I Reduce My Taxi Insurance Costs?
There are a number of ways in which to reduce your taxi insurance costs, even at the beginning of your taxi business journey. Whilst it may be tempting to go onto insurance comparison sites to find the cheapest prices, this doesn’t necessarily offer you the right cover for your business. Always find an experienced taxi insurance broker who has dealt with hundreds of small taxi businesses just like your own and knows the importance of keeping costs to a minimum at the early stages.
Some areas to think about when looking at taxi insurance premiums and getting a better deal:
Shop around: investigate the best specialist car insurance brokers on the market and get several quotes to find out who can offer the best coverage at a reasonable rate. Cheap doesn’t always mean comprehensive cover for your business, so read the small print and query any terms and conditions you may not understand. The quotes given will depend on various factors including age and experience, how many years of no claims you have as well as others mentioned such as where you will be driving and the location of your vehicle when not in use. Off-road or secure parking will have preferential rates to on-road.
Security features: as well as where you park your taxi when not in use, you may want to invest in specialist security equipment that can be fitted to your taxi. Modified doors that only open from the inside will deter anyone entering your taxi without your permission. CCTV can help keep you and your passengers safe – place stickers inside your cab to make opportunistic thieves aware that you have installed CCTV. It also helps should you need further evidence of any issues.
Having a dash cam is also a good idea if you need to prove who’s fault it was in the event of an accident to help your taxi insurance claim. Various locks and alarms can keep your taxi secure when parked, and making sure it is in a well-lit area will deter thieves.
Increasing your excess? if you have a long history of careful driving, increasing the excess (the amount you will need to pay out in the event of an accident) could make your premium cheaper in the short-term. However, you need to weigh this against the additional driving you might be doing, whether it will be inner city and if you could afford to pay the higher excess should the worse happen.
Choose your vehicle wisely: when looking at the type of vehicle to invest in for your business, try and choose one in a lower insurance bracket. While you do need a certain amount of space and reliability with your taxi, you may find some vehicles are considerably cheaper to insure, particularly if you stay away from high-end, luxury vehicles until your business is well-established.
Avoid points on your licence: having points on your licence can push up your insurance premiums considerably. Try to ensure you always stick to the designated speed limits and use a hands-free mobile phone to avoid being pulled over for illegal mobile phone use.
Estimating your mileage: if you haven’t chosen unlimited mileage due to cost constraints, try to be accurate with the mileage estimates you have given your insurance broker. Underestimating your mileage could cost you dear in the future and may even void your policy. Always keep your broker updated with any changes.
What are the Private Hire Taxi Insurance Exclusions?
Most private hire taxi insurance policies do not usually cover the following:
- Drivers under the age of 25. Sometimes an insurance company will make an exception if you can prove a clean driving history, but you will pay substantially higher premiums, particularly if you haven’t built up sufficient no claims. To help its younger drivers get started, Tradex offers a Bonus Booster, whereby drivers without a no claims bonus history can take out a six-month policy which allows them to accrue a full year’s no claims bonus which can then be used on one of its full-term policies.
- Theft of vehicle if the keys are left in it. As a taxi driver, you are often in and out of your cab which could give thieves easy access. Removing your keys each time you leave your vehicle, however short the time, can avoid you being left without the appropriate insurance cover.
- Unauthorised or unsafe vehicle use. Driving without the requisite taxi licence, or lying to get your licence, can carry a heavy fine and will void any insurance policy. Carrying too many passengers or heavy, unauthorised loads can leave you uninsured. Make sure you stick within the UK taxi rules to avoid any nasty surprises.
- Driving out of the region laid out in the policy. If you have stated you drive in mainly quiet, rural roads and then end up doing plenty of city drops, you may find you get into hot water with your insurance broker and not be covered in the event of an accident.
Private Hire Taxi Laws
Before setting out in any private hire taxi business, you need to be aware of the legal requirements. The following actions will break the law and carry heavy fines:
- Taxi Touting Charges
If you are a licenced private hire taxi vehicle and you are found to be soliciting or ‘touting’ for hire, your taxi licence could be revoked and you could face a fine. If you are driving a private hire taxi, the law requires that your fare must be pre-booked. Taxi touting falls into two main categories: soliciting people to hire vehicles to transport them as a passenger in a public place and displaying the word ‘taxi’ or ‘hire’ on the vehicle. Not only could you lose your taxi licence, but your insurance policy would also be invalidated and it’s unlikely it would be renewed.
- Driving Without a Valid Taxi Licence
If you are found driving a taxi without the correct licence in place, you could be looking at a fine of at least £2,500. This is a very serious crime which will likely involve you accruing significant penalty points on your driving licence as well as voiding your taxi insurance.
- Failing to Produce a Valid Licence
If you have failed to show a valid taxi licence when asked, you will be expected to produce one within five working days or face a significant fine.
- Giving Incorrect Details When Applying for Your PHV Licence
If you knowingly give false information when applying for your licence, such as not declaring penalty points or putting down a false name and address, you could face a find of up to £250.
- Driving Without the Correct Private Hire Vehicle Insurance
It goes without saying, driving without the correct private hire taxi insurance in place is both illegal and could lead you to face hefty fines. As discussed earlier, a general motor vehicle insurance policy does not give you or your passengers sufficient protection. A court would likely hand you a £5,000 fine, issue at least six penalty points on your licence and ban you from taxi driving for a significant period.
- Smoking While Driving a Taxi
While this may only carry a small fine and is a minor offence, it is still seen as antisocial and a health risk to your passengers. They are within their rights to report the offence and may even make a claim against you if it was found to cause any health issues. You must display ‘no smoking’ signs in your vehicle.
- Refusing to Carry a Disabled Passenger in Your Taxi
You could face a fine of up to £1,000 by refusing to carry a disabled passenger and their guide dog. You cannot also charge an additional fare for including a guide dog or to transport a disabled passenger.
Being a private hire taxi driver can offer great rewards. Making sure you have the right taxi insurance in place will give you peace of mind for you and your passengers when out on the road.