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Taxi insurance explained

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All you need to know about taxi insurance.

London Taxi

Working as a taxi driver remains a popular occupation in the UK, and the growth of ride-sharing services such as Uber means this is unlikely to change in the near future.

In general, taxi drivers use cars they already own to carry passengers. But while these cars may be insured for personal use, you’ll also need to get a taxi insurance policy before the first fare is picked up.

Why do I need taxi insurance?

There are extra risks associated with using a car as a taxi. Insurers may require higher premiums to cover these risks, but they also need to know how you use your car in order to get the most accurate price.

If you use your car as a taxi service ie if you use it to pick up paying passengers, then specialist insurance is needed. This applies even if you only do so on a casual basis.

Without the right cover, your insurer may be within its rights to turn down any claims or cancel your policy.

Why is taxi insurance likely to be more expensive?

In general, when a car is being used for business purposes, the cost of insuring it is higher than if the car is only used socially or for commuting.

The most obvious reason is that the vehicle is likely to be covering more miles, so there’s an increased probability of it being involved in an accident.

But the nature of a car’s use as a taxi or private hire vehicle can also mean accident risk, and therefore premiums, are higher. For example, a taxi is likely to spend a lot of its time in busy urban areas, where accidents are more prone to happening.

Equally, taxi drivers often face significant pressure to deliver fares as quickly as possible, especially during very busy periods. Again, this pressure can in some cases lead to a higher statistical risk of a collision.

The type of cars used as taxis tend to be larger than normal, as they are required to carry more passengers. This can also result in higher-than-average premiums, as larger cars such as people-carriers and MPVs typically cost more to insure.

Types of taxi insurance

The kind of policy you choose depends on what kind of taxi business you’re involved in, as well as whether you need cover for extra drivers or multiple vehicles.

Taxi insurance sometimes falls under the category of “hire and reward” insurance – although this also applies to the likes of couriers and hauliers.

The main factors you need to consider when choosing a policy are:

Public hire 

If your car is a minicab which must be pre-booked by passengers, you’ll probably need a different type of insurance policy. With policies for private hire, premiums can vary significantly based on factors such as the age of the car as well as the driver’s age and claims record.

Private-hire

If your car is a minicab which must be pre-booked by passengers, you’ll probably need a different type of insurance policy. With policies for private hire, premiums can vary significantly based on factors such as the age of the car as well as the driver’s age and claims record.

Who can drive the taxi?

Are you the only one using the car as a taxi? If not, you’ll need to arrange an any-driver insurance policy, which tends to be more expensive than if it’s just you.

Public liability insurance

As a taxi driver, it’s important to have cover against any claims brought by your passengers. Some policies will include this as standard, but it’s important to check.

Other factors to consider

When choosing a taxi insurance policy, think about whether it puts any limits on your – or your family’s -- ability to use your car when you’re not working. Adding extra drivers to some taxi policies may push costs up sharply.

Breakdown cover is an optional extra that could be well worth considering given the potential impact of mechanical problems on your ability to do your job.

Other policy add-ons worth considering include:

  • Windscreen cover, which can help ensure your taxi isn’t kept out of action for longer than necessary.

  • Legal expenses cover, which helps cover bills in the event of legal action from other road users.

How to keep taxi insurance premiums down

While premiums are likely to be higher than normal cover, it need not be prohibitively expensive.

To cut costs, consider:

  • Shopping around for cover: There are numerous providers of taxi insurance, so shopping around for the cheapest or most suitable deal makes a lot of sense.

  • Go for the right vehicle: Generally, the less powerful your car is, the less it should cost to insure. If you’re about to buy a car to use as a taxi, check the likely insurance costs beforehand using a comparison service.

  • Your own driving record: If you have a long history of claim-free driving, this will count in your favour when it comes to taxi insurance costs. Some insurers will factor in your claims record from your private motor policies.

  • Improving your security: The harder your car is to steal, the better your chances of lowering your costs. Investing in extra security measures such as immobilisers can pay off in the long run.

We don't currently compare taxi insurance. 

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