Understanding the cost of taxi insurance

If you drive a taxi for a living, you’ll need taxi insurance by law. If you’re caught without it, it can lead to heavy fines and disqualification from driving.

It’s also important that the type of insurance you have reflects the type of taxi you drive, but that difference can affect what you end up paying. We take a closer look at what affects the cost of your taxi insurance and what you can do to help keep premiums as low as possible.

• What is taxi insurance?
• How much does taxi insurance cost?
• What affects the cost of taxi insurance?
• Is taxi insurance more expensive than standard car insurance?
• How can I lower the cost of taxi insurance?
• Taxi insurance that reflects your business

What is taxi insurance?

Taxi insurance is a specialist policy that covers you to carry passengers (and goods) in exchange for payment. They typically include public liability as standard too, which covers costs if a member of the public blames you for injury or damage.

Your policy has to cover the type of taxi you drive, for example, whether you’re licensed as a Hackney carriage (which can be hailed on the street) or as a private hire vehicle (which must be pre-booked).

How much does taxi insurance cost?

The cost of taxi insurance is individual to your risks, considering the factors outlined below.

What affects the cost of taxi insurance?

What you pay will depend on your own circumstances and insurers will consider a number of factors to work out a premium, for example:

How long you’ve had a taxi licence for

Experienced taxi drivers can expect to pay less compared to newly licensed colleagues. This is simply because, as a new taxi driver, inexperience potentially puts you at greater risk of having an accident and making a claim.

How you operate

Your policy has to reflect how you use your car which can lead to higher premiums. For example, Hackney carriages are assumed to be at greater risk of making a claim. This is because they have the potential to pick up fares spontaneously either from being hailed or from a taxi rank. On the other hand, private hire taxis can only carry pre-booked passengers.

Most insurers will ask for more details about how you operate and calculate your premium accordingly.

Your no claims bonus

The more years of no claims you have, the bigger the discount on your premium (just like your car insurance).

You can also protect your no claims bonus, but bear in mind that this will increase your premium slightly.

The car you drive

Some cars cost more to insure because they’re more expensive to repair or replace. This can include new cars, hybrids, and electric vehicles.

You can roughly gauge how expensive a car might be to insure by looking at its insurance group; there are 50 insurance groups in total. The higher the group number, the more you can expect your policy to cost.

Where you work

If you’re driving in and around busy built-up areas, your insurance is likely to cost more compared to a taxi driver working somewhere quieter and less populated. Again, this is simply because driving in congested towns and cities increases the risk of something unexpected happening.

Your driving history

Penalty points and driving convictions will increase your premium as insurers will see you as a higher-risk driver and raise the cost of your policy to reflect that. Any recent claims you’ve made can also increase your premium.

Your age

As is the case for almost all young drivers, the younger you are, the more your insurance is likely to cost. Typically, policies are most expensive for under 25s; after that, premiums tend to fall before they rise again for older age groups.

Your level of cover

Taxi insurance is usually flexible, so you can choose your level of cover (third-party, third-party fire and theft, comprehensive) along with optional extras. The higher the level and the more options you choose, the more you can expect your policy to cost.

The amount of public liability you need

Taxi insurance typically includes some level of public liability, usually around £5 million. This is aimed at covering legal and court costs if someone decides to sue you for injury or damage to their property.

However, you can increase that amount if you need it. For example, if you’re a contractor for your local council, they might ask that you have a minimum amount of cover in place. The more this is, the higher your premium.

Residency status

If you’ve recently moved to the UK, some insurers set a minimum residency period on their policies. For example, they may specify you need a minimum three-year residency in the UK.

Is taxi insurance more expensive than standard car insurance?

Yes. Most types of commercial motor insurance, including taxi cover, are typically more expensive than standard car policies. This is because driving for long periods, often at peak times in heavy traffic, puts you at greater risk of being involved in an accident. From an insurance point of view, this increases the risk of you making a claim, which is mirrored in the cost of premiums.

How can I lower the cost of taxi insurance?

While choosing the cheapest option for your taxi insurance can be tempting, remember that taxi cover is your safety net should anything go wrong. A policy that doesn’t cover your needs is likely to be a false economy in the long run.

However, there are practical steps you can take to keep premiums as low as possible, for instance:

• Pay for your policy annually rather than in monthly instalments.
• Choose a car in a low insurance group.
• Build up your no claims bonus and consider protecting it if you have several years’ worth.
• Think about what you claim for – the more insurance claims you make, the more your policy will cost at renewal.
• Consider car security and where it’s parked overnight, as secure parking can shave a little off your premium.
• Only add on extras you think you’ll use or that represent good value (such as breakdown cover)

Taxi insurance that reflects your business

It’s important to ensure your taxi insurance accurately reflects how you operate. If it doesn’t and you have an accident, your insurer can void your policy. This means it’s as if you have no insurance at all and you could also receive a fine.

At Alan Boswell Group, we recognise how important it is to have affordable cover that also gives you peace of mind. As well as cover for third-party damage, we offer public liability up to £10 million, personal accident and breakdown cover. Our policies can also help compensate you for damaged equipment, including your taxi meter and any two-way comms devices in your car.

To find out more about our taxi cover or for information about other commercial or fleet insurance policies, speak to one of our experts on 01603 482882.