Are you planning a change of career for the New Year? Does being ‘your own boss’ sound like a great way to earn a living? Across the country, thousands of men and women earn a good living as licensed taxi drivers, whether they’ve done ‘The Knowledge’ and are driving an iconic London Black Cab, or are a private hire driver specialising in weddings and events.
Taxi driving is a tough career choice, though, and from the outset you have to have have not just the vehicle and the knowledge, but the right insurance too. Get it wrong and you could be off the road before you even get into gear and let the handbrake off!
So to ensure you’re ticking all the right boxes (as well as saving money on your premiums), we’ve put together a comprehensive guide to taxi insurance, from legal requirements through to industry insider advice to cut the cost of your cover.
Taxi insurance and your legal obligations
Let’s start with the letter of the law. Just like any other vehicle on UK roads, your taxi must have vehicle insurance. But beware – ordinary car insurance will not cover you if you want to operate your vehicle as a taxi. Look at the fine print and you’ll find that ordinary car insurance won’t even cover you for your daily commute. So you will need to talk to a broker who can find you specific vehicle insurance for commercial use and, in particular, insurance that covers you when carrying passengers.
Primary and subcategories
These are the types of ‘Hire and Reward’ service you offer, and will have a determining factor on the type of insurance you need to take out, which regulations you have to adhere to and what level of ‘risk’ your insurance provider will classify you under.
The two primary types of taxi insurance are Public Hire and Private Hire:
Public Hire
This is designed for taxi drivers who accept fares from passengers at the side of the road or who do not pre-book a cab (such as black cab and Hackney carriage drivers licensed to pick up passengers without prior arrangement).
Private Hire
This covers taxi drivers who are only licensed to carry pre-arranged passengers who have booked through a licensed operator. Private hire insurance does not cover drivers for ‘hailed’ fares or pick-ups that have not been pre-arranged. This includes limousines, minicabs, chauffeured vehicles and corporate pick-ups (such as airports) etc.
For both categories you should be covered for third party only, third party, fire and theft or, optimally, fully comprehensive coverage. You may also add on features such as breakdown cover, but these are not legal requirements.
How licensing affects your insurance
Some insurance providers will require proof of your licensing agreement with your local administrative authority or council or, if you are a Hackney Carriage operator, your badge number. If you are operating a fleet of vehicles then you will need to supply proof of a current licensing agreement to get insurance.
Licensing authorities may also require you to have public liability insurance or Third Party Liability cover before issuing an operator’s licence.
Insurance for self-employed drivers
Depending on what type of taxi service you plan on offering, you should choose from the above categories (Private or Public Hire), and add on Public Liability cover as an absolute minimum. You should then consider adding other types of cover, including loss of earnings, breakdown cover, personal injury and legal expenses cover.
Insurance for employed drivers
If you work for a taxi firm you will need to talk to your fleet manager about what type of insurance is offered to drivers through the company, whether they are responsible for insuring the vehicles, and whether you are covered under their Public Liability insurance. You may find that taking out your own Personal Liability cover and loss of earnings insurance is a wise move. Also ensure that if you are using a fleet car that your own private vehicle is insured under a separate, standard policy. If you are required to supply a vehicle you will need to take out Public or Private Hire accordingly.
Insurance for Taxi firms
As well as comprehensive fleet cover for taxis, firms need to comply with employment law by having Employer’s liability insurance. This includes firms that employ part-time drivers, or sub-contractors. Remember that Employer’s Liability insurance is mandatory, even if you only employ someone on a part-time basis to answer the phone.
If you are running a fleet of vehicles then you will need to ensure all of them are covered, and if drivers ‘swap’ between vehicles then you will also need to ensure that the insurance includes ‘multiple driver’ cover as well. Other types of business insurance need to be considered, including loss of earnings, commercial building and contents insurance, and for owners, personal liability insurance is wise.
Licensing
The licensing laws in the UK tend to vary from council to council. If you want to operate as a Private Hire Vehicle (PHV) operator then you have to apply for a licence from your local authority. Drivers and vehicles will also need the correct licences (as indicated by the metal plate on the back of a private hire taxi). PHV operator licences are valid for a maximum of 5 years, driver licences for up to 3 years and vehicle licences for up to 1 year. You must also insure that the driver, vehicle and operator are all licensed by the same authority – you cannot have a vehicle and driver licensed in one council area and operate in another.
The licensing laws in London are a little different, and will depend if you are operating a private or public hire taxi. Taxi licensing in London is handled by Transport for London, and compliance will include specific guidelines on how to operate at appointed and temporary taxi ranks, etc.
For more information on licensing guidelines in your area, contact your local council and speak to the licensing officer.
Why do you need Taxi Insurance?
Not only does taxi insurance ensure you’re covered legally to drive and operate as a taxi driver on UK’s roads, but if you put together a comprehensive package of cover it will protect your interests too. It gives you the peace of mind that should you be injured you will still have some kind of income, it will ensure your legal costs are covered (which can be incredibly expensive), and it protects you against claims for injury or damage in the event of an accident.
You also have to have the right kind of taxi insurance (either private or public hire cover) to apply for a licence to operate as a taxi driver.
Advice from the experts at Park Insurance
We talked to Marc Loud at specialist insurance experts Park Insurance, and asked him some key questions that could help you to not only choose the right taxi insurance, but keep the costs down too.
Beyond the legal requirements, what types of insurance are recommended for taxi drivers?
There are three additional types of insurance that providers recommend for taxi drivers. The first is Personal Accident insurance. This gives you financial cover if you are injured and cannot work for any length of time. “It’s a tough industry even when you’re working seven days a week, so having to take time off to recover from an injury can really impact on your financial situation,” comments Marc. “Personal accident cover ensures that you have at least some kind of income while you’re recovering.”
The second is breakdown cover that also includes access to a hire car. “Your car is your livelihood,” says Marc. “So being without your vehicle basically puts you out of work, even if it’s a minor repair. Breakdown cover ensures you get to a garage as quickly as possible, and that you have access to another vehicle while you wait for yours to be repaired.”
The one that many people forget about, though, is Legal Expenses cover. “While your normal taxi insurance may cover you against claims after an accident, it won’t give you any cover for your legal expenses,” explains Marc. “And if you have to hire a solicitor to defend you in the event of an accident claim then costs can run into thousands of pounds. Legal Expenses cover may seem like an additional burden on your initial policy, but it could stop legal fees from emptying your bank account!” he adds.
How can taxi drivers reduce the cost of their insurance?
While we may no longer be in a recession, times are still tough, especially for the highly competitive taxi industry. So the cost of insurance is a fundamental issue for both private and public hire drivers.
However, there are ways of reducing your premiums. “One of the best ways to drop the costs and protect yourself from ‘cash for crash’ merchants is to fit dash-cams and in-car cameras,” comments Marc. “These are now easily affordable for most drivers, and are becoming increasingly popular. Not only do they provide vital evidence in the event of a crash, but in-car cameras can also protect you against attacks from passengers too – a problem that concerns all drivers, especially late at night,” says Marc. “Insurance companies are also keen for drivers to embrace new technology like in-car and dash cameras, and fitting one can make a considerable difference to your premiums,” he adds.
Marc also advises to look for ‘freebies’ and special deals, but be aware that once the introductory period is over the renewal fees can increase considerably. So look for long-term deals from reputable providers.
What should you be aware of when choosing a provider?
Just like any other type of insurance, the big one that Marc Loud and the experts at Park Insurance recommend you look out for is the excess fee. “This can make a huge difference not just to your initial premiums, but how out-of-pocket you are in the event of a claim,” says Marc.
One technique for cutting your excess depends on how quickly you report an accident. “The faster you report it, the quicker the insurance company can spring into action. Some insurance providers will actually reduce the excess if you report an accident within 24 hours. If they can start working quickly on a claim it will mean that the eventual pay-out could be reduced (especially if it includes loss of earnings), and they’ll pay less on hire car fees if your damaged vehicle is dealt with quickly. But also watch out for insurance providers who do the opposite, and charge higher excess fees if you don’t report an accident within 24 hours!” recommends Marc. “A good insurance broker will be able to find you a deal that keeps your premiums down, as well as reducing the amount of excess you have to pay in the event of an accident.”
Why use a broker? Why not just go straight to the source?
So why use a ‘middle man’ to broker your insurance? Surely it’s cheaper to just go directly to the source? In fact, there are several good reasons why using a broker may be a much better idea than spending hours searching around for taxi insurance deals yourself. “Taxi insurance is a ‘niche’ insurance, and as such not every provider is going to offer cover for commercial use,” comments Marc. “You need insurance providers that understand the industry, and also offer the right kind of insurance, whether that’s Private or Public Hire cover, as well as all the other additional insurance cover we recommend. Finding those providers can be difficult, whereas a specialist broker already has the right contacts to go straight to the best offers available.”
Look for brokers who have a ‘preferred broker’ status within the industry. “Preferred broker means we have the contacts, the expertise and the clout within the industry to seek out the best deals for our customers. It also means that we can manage the claim for you on your behalf, getting a faster, better result and taking care of all the paperwork so you can focus on getting back on the road,” says Marc.
Another thing to look out for when choosing a broker is finding one that offers a 1-2-1 service, where you have a dedicated handler from start to finish. “Going with a broker that delivers an end-to-end service ensures that you’re not being passed from one handler to another, which in turn keeps the response time for any claim down. That means you get back to work faster, and with less hassle,” comments Marc.
Why not just check out a comparison website?
While comparison websites have done a great deal to put ownership back into the hands of the consumer, they don’t cover all the bases when it comes to insurance. “Most of the major comparison websites focus on private insurance rather than commercial insurance, and as such don’t carry listings for tax cover, for example,” says Marc. “Taxi insurance is what is classed as a ‘non-standard product’, and so many comparison websites won’t carry it because it doesn’t generate enough interest for it to be profitable for them.”
The alternative is to use a broker instead. “Basically, brokers like us are our very own ‘comparison sites’ working on behalf of clients who need specialist cover like taxi insurance. However, rather than paying yet another surcharge in the chain, you’re being looked after by a real person with real experience in the industry, and who really does understand your needs. That means you save money, time and get the cover you want without being bombarded with offers for free toys, ‘targeted advertising’ and all the other hidden extras that can be the result of using comparison websites. If all you want is good quality insurance at the right price, then an experienced broker is your best bet,” he adds.
The top 5 tips for getting cheaper taxi insurance
So in conclusion, here are our top 5 tips to help you get cheaper taxi insurance:
1. Make sure you get complete coverage that includes legal fees, breakdown cover, loss of earnings and personal accident insurance, as well as commercial vehicle insurance for either private or public hire use.
2. Look for freebies, special offers and industry-focused packages.
3. Fit in-car cameras and dash cams – these will reduce your premiums, provider valuable evidence in an accident, and protect you in the event of an attack or ‘cash for crash’ scam.
4. Report accidents within 24 hours – this can reduce your excess depending on which provider you insure with.
5. Use a broker to act as your ‘comparison’ and look for companies with ‘preferred broker’ status.
For a free quote for taxi insurance call our friendly team now on 0117 955 6835 or get a quote here.