Taxi cab drivers service areas day in and day out, helping cities run smoothly and getting people where they need to be. They are unsung heroes of pretty much any downtown area. But in their continuous service, they face a lot of threats on the road. This is where taxi insurance can help. Taxi insurance provides taxi drivers and their customers with coverage following a collision. It is an incredibly important type of auto insurance to have. Accidents can not only be deadly but pricey because if you lack coverage, you will be paying out of pocket. Insurance can then help with expenses and liability claims.
What is Taxi Insurance?
Taxi insurance, also known as for-hire livery insurance, is a type of commercial auto insurance that provides protection for vehicles used by companies to transport people. Transportation is usually part of their business model and generates income. They rely on these vehicles for profit. Taxi insurance protects drivers, vehicles, and any passengers in the event of an accident. Insurance coverage can also be expanded to provide protection for your vehicle against damage and theft along with personal injury for you and your customer(s). Being a taxi driver comes with a variety of risks, and it is important to try to prepare for them. That is where insurance comes in to help.
Types of Taxi Insurance
There are two different types of taxi insurance you will encounter when shopping around for a policy. Which type you fall under will impact your insurance premiums and coverage requirements. The two types are:
- Private-Hire - Private-hire taxis are taxis that individuals must book prior to traveling. They cannot be flagged down, nor do they advertise that they are a taxi. You must set up a pick-up time.
- Public-Hire - On the flip side, public-hire taxis are pretty much any taxi you see cruising around a city. Individuals can wave one down and use their services immediately. They also famously display taxi signs. Public-hire taxis generally have different insurance requirements than private-hire taxis.
Do All Taxi Drivers Need Insurance?
Yes. Taxis and their drivers face a countless number of risks every day they hit the road. Not to mention that driving a vehicle without insurance is illegal in nearly every state. If you operate a taxi business or are a taxi driver, you need taxi insurance. It will help keep you protected in the event of a collision. It can also provide you with liability coverage along with other types of insurance like those for property damage and medical expenses. Driving without coverage is an incredibly risky thing to do, not to mention insanely illegal. You do not want to be on the hook for damages if you drive uninsured.
Business Operations Covered by Taxi Insurance
The word taxi may have a few different meanings for businesses. It is not always the flashy, yellow cars you see in downtown cities. Various different vehicles get people where they need to go, thus meaning they most likely need taxi insurance coverage. Some examples may include:
- For-hire transportation
- Black cat
- Partial rideshare services (Uber, Lyft, etc.)
- Executive transportation
What Does Taxi Insurance Cover?
The coverage offered by taxi insurance is not too different than that offered by other commercial or personal auto insurance policies. Taxi insurance offers the following types of coverage:
- Liability Insurance - Liability insurance encompasses coverage for any property damage and bodily injuries you cause to another driver(s) in an accident. It can also help with legal fees should you be sued by the other party.
- Collision - This type of coverage pays for damage to your vehicle following an accident. It pays out no matter who was found to be at fault.
- Comprehensive - Comprehensive insurance covers damage to your vehicle sustained in a non-collision-related incident. This includes instances such as extreme weather, fire, and theft.
- Uninsured/Underinsured Motorist Coverage - If you end up in an accident with a driver who lacks liability insurance, uninsured/underinsured motorist coverage helps cover medical expenses and auto repairs.
- Personal Injury Protection (PIP) - Personal injury protection (PIP) pays for medical expenses and lost wages you and your passenger(s) accumulate following an accident.
After analyzing the list above, you may wonder why you cannot just purchase personal auto insurance to get the same coverage. The issue lies in coverage limits and protection for business operations. Personal cars do not function as taxis do. How to use a personal vehicle as a taxi will be covered in a later section.
Requirements For Taxi Insurance Coverage
In order to get insurance as a taxi driver, you will have to meet a number of requirements. Failure to meet them will most likely result in you not getting coverage or, at the very least, having higher premiums. Tax insurance requirements are:
- 25 and older - If you are under the age of 25, you may have a hard time getting taxi insurance. The same barriers may exist if you are over the age of 65.
- Age of vehicle - Older vehicles are less likely to get insured.
- Area of operation - Taxi insurance covers only a certain area. If you operate outside the designated zones, then you may not be covered in an accident. States and cities also have their own taxi insurance requirements.
- Driver background - Not only will your age come into play but also your criminal history. If you have been convicted of a serious offense (ex. Driving under the influence, vehicular manslaughter, etc.), you will have a hard time getting taxi insurance coverage.
How Much Does Taxi Cab Insurance Cost?
Taxi insurance may easily be some of the most expensive insurance you encounter, exceeding the average cost of commercial auto insurance. On average, taxi insurance can cost anywhere from $5,000 to $10,000 annually. That comes out to a monthly rate of $417 to $833. Since taxi cabs spend so much time on the road, their collision risk is higher, making their insurability risk increase. They also deal with the public a lot, meaning injury claims have more of a chance of happening.
What you pay for insurance is determined by a number of personal factors. Insurance companies look at you, your drivers (if any), your vehicles, and your business as a whole to determine annual rates. Some things that influence your cab insurance premiums include:
- Years in business - How long your cab business has been established will impact your insurance rates. The newer you are to the industry, the higher your premiums may be.
- Location - Where you operate will have a big effect on your insurance premiums. If the area is densely populated, your chances of getting into an accident increase, which in turn can raise your rates.
- Coverage limits - How much insurance you want will definitely affect your rates. The more coverage you purchase, the more you will be paying annually.
- Age of vehicles - As previously mentioned, older vehicles may have a hard time getting insurance, and if they finally do, rates may be increased.
- Type of taxi insurance - Whether you need public hire or private, hire taxi insurance will determine your rates. Public-hire taxis tend to see higher premiums.
- Experience - You and your driver(s) history on the road will be taken into consideration. The less time behind the wheel, the more your insurance rates will be. On the flip side, if you have a long history but a poor record, your rates could increase.
Find Cheaper Rates on Taxi Insurance
Since a taxi insurance policy can get very pricey very fast, you may be hunting for some ways to lower your rates. Thankfully, there are a number of steps you can take to lower your insurance premiums. Some of these are instant, while others gradually decrease rates or simply keep them lower. You can find cheap taxi insurance coverage by looking into the following:
- Discounts - Your insurance provider may offer a number of discounts on your premiums. For example, if you pay your annual insurance premium in one lump sum at the beginning of the policy period, you may receive a discount.
- Shop around - Always pull quotes and analyze policies from a wide variety of insurance companies. Looking both nationally and locally can help you find the best rates.
- Good driving record(s) - Being a smart and safe driver while hiring safe drivers can help keep your insurance premiums low. Keep in mind that every claim will increase your rates.
- Adjust deductible - The higher your deductible is, the lower your insurance rates will be. But it is important to remember that this means you are promising to pay more out of pocket in the event of a claim. Increasing your policy deductible just for the sake of a lower insurance premium may not be worth it following a claim.
Using Personal Vehicle For Your Taxi Business
It is possible to use your personal vehicle for your taxi service; just make sure you understand the laws and regulations for taxi drivers in the area. Some states do not allow personal cars to be used for taxi service, while others do. If you are in an area where it is legal, you will have to make sure you purchase a taxi insurance policy. A personal auto insurance policy will not be enough to protect you as you are now operating as a business. You need the higher coverage and specific protection this type of commercial insurance offers.
Other Types of Insurance For Your Taxi Business
Your taxi service is not fully protected just because you purchased a taxi insurance policy. Operating as a driver comes with other responsibilities, especially if you are a business owner. You want to make sure you have all aspects of your business covered. Other types of insurance taxi services need to consider purchasing include:
- Workers’ Compensation - Workers’ compensation is key for any business, especially one that employs drivers and relies on them for income. Workers’ comp will help pay for medical expenses if your driver is injured while on the job. It also provides a reduced wage for when they are at home recovering.
- Employment Practices Liability Insurance - This type of liability insurance protects you as a taxi service operator if you are accused of something like discrimination or wrongful termination. It helps pay for the legal fees that follow.
- Business Interruption Insurance - If tragedy strikes your business and you need to close the doors for a period of time, business interruption insurance will help cover lost wages until you are ready to operate again.
- Commercial Property Coverage - This is an important insurance to have if you operate your taxi service out of a garage. It will help protect your commercial property in the event of a disaster, like fire or vandalism.
Get a Taxi Insurance Quote Today
Looking for a taxi insurance policy? Contact us today to get a free taxi insurance quote. Make sure you let us know your zip code, details of your business, and information on your taxi(s). By providing us with all this, we can get a better idea of the coverage you need. Quotes are available either at one of our many locations or online in just a few clicks via our website and mobile app. We are also just one call away. Get your taxi(s) insured today and drive worry-free tomorrow.
*This product may not be available in every state, please call an agent for more information.