What is Taxi Insurance?
Taxi insurance is a type of business insurance that falls under for-hire livery insurance and is a specialized type of commercial auto insurance. You need to make sure the policy you choose covers all of the risks you face as a taxi driver. The policy should include comprehensive coverage for:
- Auto Liability Coverage: This is the most common type of commercial auto insurance and is required for most taxi drivers. This can cover damage to or replacement of vehicles, third-party medical expenses, legal expenses if you’re sued, potential loss of income of the injured party—and funeral expenses.
- Comprehensive: This insurance coverage will cover the cost of repairs—or replacement—if your cab is damaged by weather, theft, or vandalism.
- Collision: Collision will cover the damage that is done to the taxi-cab as long as the policyholder is at fault. If another party damages your cab, their liability is responsible for repairs.
- Uninsured or Underinsured Motorist: This insurance coverage is required by most states. It provides cover if the other party involved in an accident is liable and doesn’t have insurance coverage—or enough coverage to cover the cost of damages.
You can also acquire optional ‘accessories’ coverage for things that aren’t affixed to your vehicle such as GPS, mileage meter, phones, etc.
The Two Categories of Taxis
Where you fall under these categories can impact the cost of your insurance coverage and requirements to receive the coverage. What are they?
- Public-Hire: Public-hire taxis are those that can be hailed off the street and the ride doesn’t have to be pre-booked.
- Private Hire: A private-hire taxis must be booked in advance and do not advertise that they’re a taxi.
Do I NEED Taxi Insurance?
To be a taxi driver in most states you're required to obtain taxi insurance to protect yourself from liability and to protect your passengers. We'll share some examples to illustrate our point:
Example #1: You have obtained the bare minimum taxicab insurance necessary. While driving a passenger to the airport, you are t-boned by a vehicle. You are fine, but your passenger is complaining of neck pain and they are brought by ambulance to the hospital. You find out after the fact that the other driver doesn't have insurance—but you don't have Uninsured or Underinsured Motorist coverage. Unfortunately, you get to foot the passengers medical bills.
Example #2: Multiple vehicles are involved in a pileup on the freeway and you're one of the unlucky victims. Luckily, you don't have a passenger in the cab. However, the damage to your vehicle is significant and you don't have comprehensive collision coverage under your liability insurance. Your insurance company will cover some of the cost of repair, but you'll have to foot the remainder of the bill.
Requirements to Receive Taxi Cab Insurance
In order to receive insurance as a taxi driver, almost every insurance company will require:
- You HAVE to be 25 or older. Some insurance companies will not insure you as a taxi driver if you’re over 65.
- Your taxi insurance covers a certain area. If you go outside of the designated area, you may not be covered.
- The age of your vehicle is a factor. Some taxi insurance companies will not insure older cars.
- You cannot have been convicted of possession of weapons/drugs, vehicular manslaughter, or if you’ve been arrested for driving under the influence.
What Does Taxi Insurance Cost?
The cost of insurance for taxi drives costs anywhere between $5,000 to $10,000 annually. Why is taxi insurance so expensive compared to most commercial auto policies? There are a few reasons:
- They spend more time on the road and are therefore at higher risk of an auto accident than other drivers.
- Taxi cabs don’t get to choose where they drive. They may end up in more congested traffic during rush hour—also increasing the chance of an accident.
- Consistently having passengers increases the risk of personal injury claims if there was an accident.
What else influences the cost of taxi insurance?
- How many years you’ve been in Business
- What your claims history looks like
- The coverage limits you choose for your policy
- How old your vehicle or vehicles are
- If you are a public hire or private hire taxi
- Your age and level of driving experience
- The credit score of your business
How to Lower Taxi Insurance Premiums
There are a few strategies you can implemented to lower the cost of your taxi insurance coverage:
- You may be offered a discount by the insurance company if you can pay your annual coverage in one lump-sum.
- If you have a driving history free of claims—or have avoided making unnecessary claims—it can save you money. Always be sure to drive carefully. You can also establish a safety program or procedure for you and your drivers to avoid and eliminate the risk of accident.
- Choosing a higher deductible (that you can still afford) can lower your premium.
- Lastly, shop around for the right insurance company. A good agent should be able to help you find the most affordable policy that you qualify for.
Other Commercial Insurance Policies to Consider
- Employment Practices Liability Insurance: EPLI protects you as the small business owner if you’re accused of discrimination, sexual harrassment, etc.
- Business Interruption Policy: If you get in an accident that impairs your ability to drive and complete your job requirements, this insurance policy can help cover your wages until you’re able to work again.
- Workers’ Compensation Insurance: If you run a taxi company or hire other drivers, you’re required to obtain workers’ comp insurance in most states. It helps cover medical expenses and lost wages if an employee is injured or becomes ill on the job.
Get a FREE Taxi Insurance Quote
Complete the form at the top of the page and one of our agents will connect with you to get you an insurance quote and help you find the right policy for your taxi business. Or, give us a call at 1-877-907-5267. Business insurance doesn't have to be expensive—let us help you get the coverage you need at a price you can afford.
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