The profitability of your taxi business is based on your income minus overheads. Keeping those regular bills like taxi insurance to a minimum means you get to keep more of your hard-earned cash.
So what kinds of things affect your taxi insurance premium? Let’s look at eight major factors.
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The vehicle you drive
You expect to pay more to insure a Ferrari than a Punto – the same applies to taxis.
The basic principle is that vehicles with larger, more powerful engines cost more to insure. Premiums also cost more if your vehicle is a common target for thieves or has a poor safety record.
Check out the Group Rating Panel to find the pricing group of your vehicle.
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No claims bonus
Insurance companies want to reward good driving, which is why they offer a no claims bonus.
The more years you go without a claim, the greater the discount on your insurance will be.
You might want to pay a little more to protect your no claims bonus, which means you won’t be penalised for making a single claim every year or so. This is a form of taxi driver cover you add to your taxi insurance policy when you buy insurance.
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Type of insurance
It’s wise to think carefully about the level of taxi insurance cover you require.
By law, you need at least third party, fire and theft cover but as your vehicle is your livelihood, it’s a good idea to take out comprehensive cover plus additional options for things like loss of income.
Insurance costs also vary for private hire (minicabs) and public hire (taxi rank vehicles).
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Annual mileage
Taxi drivers spend long hours on the road – often at peak times of day and congested routes.
These challenging conditions are reflected in the price you will be quoted for taxi insurance.
The more you drive each year, the more you can expect to pay for your cover. More road covered usually means more risk.
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Your age and experience
As you’d expect, insurers recognise that experience is important.
A young taxi driver who is fresh on the road has not had time to build up the skills and understanding of a taxi driver who has held their licence for decades.
Generally speaking, young taxi drivers with little experience pay the most for insurance.
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Points on your licence
Being caught breaking the rules of the road is a big signal to your insurer that you might be a risk-taker.
That’s why your premiums rise when you get points on your licence – you may even be refused cover if found guilty of an offence, no matter how minor.
Driving safely at all times will not only reassure your passengers and boost your reputation, it will also help to keep your insurance costs down.
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When you drive
You should expect to pay more for insurance if you work at night, especially on a Friday and Saturday night when the streets are livelier and drunk paying customer may present a greater risk.
Daytime driving is generally cheaper to insure, although you might pay a little more if you transport vulnerable groups such as children, the elderly or very sick people. It may even be worth considering if you need to have a child car seat or not.
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Security of your vehicle
Fitting security measures such as CCTV, immobiliser and alarms will usually reduce your premiums.
Another security factor is the place where your vehicle is stored; a locked garage in a low-risk neighbourhood will shave money from your premiums, whereas on-street parking in a dodgier part of town will add to costs.
If your taxi insurance premium looks a bit steep, or even threatens the viability of your business, what should you do?
Firstly, shop around. No two insurance companies are exactly alike, and you may be quoted a better price by another company.
However, remember to check the level of cover provided carefully. If you need to make a claim, having a professional, efficient insurer to deal with makes a world of difference.
Going for the cheapest option doesn’t always make the best financial sense in the long run.
Going for a higher excess can reduce your premium. This is the amount you would pay before your insurer would step in to cover the taxi insurance cost of a claim.
The higher the excess, the lower the premium - but remember, you do need to be able to actually pay the excess in the event of a claim.
Your excess should be what you could comfortably pay, otherwise you might end up being unable to get back on the road, which could have a detrimental effect on your business.
If your premiums are still too high, consider whether a different vehicle, shift pattern, or better security might help.
You should also be able to arrange a payment plan with your insurer – paying monthly can help spread the cost throughout the year, so you don’t need to find a significant sum all at once if cashflow is an issue.
Councils and penalty points
Councils set their own rules about how many penalty points taxi drivers may have before their licences are revoked, so you might lose your licence even if you are not disqualified from driving.
You should check the rules followed in your area to be sure you know the cut-off point.
Councils may also apply their own penalty point system to taxi drivers. For example, it may count against you if you fail to carry a spare tyre, do not disclose a fixed penalty notice, or display the correct tariffs in your vehicle.
If you have too many penalty points, some councils may require you to undertake training, or even give up your licence and face prosecution. It pays to be aware of the rules that apply in your region.
What does taxi insurance cover?
Taxi insurance comes in many different forms. You might want third party, fire and theft cover, third party only cover or comprehensive cover. Employers’ liability insurance is also usually added.
You can also choose to add no claims bonus protection, cover for different vehicles such as minibuses and MPVs, and an extended claims management service.
What doesn’t taxi insurance cover?
While taxi insurance provides essential cover for a number of scenarios, it's important to be aware of what doesn't taxi insurance cover. For starters, it typically doesn't cover personal belongings left in the taxi.
If a passenger leaves something behind and it gets stolen or damaged, the taxi insurance won't reimburse the cost. Additionally, if your taxi is off the road due to maintenance or repairs, most taxi insurance policies won't cover the lost earnings during this period.
Similarly, wear and tear is another aspect that is not covered under taxi insurance. The cost of regular maintenance and parts replacements due to wear and tear will have to be borne by the taxi owner.
It's also worth noting that if a taxi driver uses a taxi for personal use without notifying the insurer, and subsequently has an accident, the insurance may not cover any damages.
This is because the insurer was not informed of the change in risk associated with the vehicle being used for personal travel. In short, while taxi insurance provides much-needed cover, it's important to understand the limitations to avoid any unexpected financial burdens.
What expenses can taxi drivers claim?
Navigating through the maze of expenses that taxi drivers can claim can be a bit confusing. From fuel to insurance, maintenance, and even a portion of your home utility bills, there are numerous costs that taxi drivers can potentially claim back. The big question is - What expenses can taxi drivers claim?
The most common expenses claimed by taxi drivers are those directly related to running a black cab. This includes fuel, repairs and servicing, insurance, and vehicle license fees. If you're renting or leasing your vehicle, these payments can also be claimed as expenses.
Aside from these, taxi drivers can also claim certain overhead costs. These could include office costs if you work from a home office; this could range from a portion of your rent or mortgage to utility bills like electricity and internet. You can also claim the cost of any taxi-related equipment you need to purchase like radios or GPS devices.
In some cases, taxi drivers might also be able to claim costs related to their personal wellbeing while on the job. This could include the cost of meals during shifts or uniforms if required by your employer.
Lastly, don't forget about professional fees. Membership fees for driver’s associations or unions, as well as accounting fees for tax returns, are all claimable expenses.
Can a taxi driver drive my car on my car insurance?
The answer is not as straightforward as you might think. It largely depends on your specific insurance policy and the terms and conditions that come with it.
Generally, most car insurance policies cover occasional drivers who have your permission to use your vehicle.
However, if the taxi driver drives your car regularly or for commercial purposes (like picking up fares), your personal car insurance may not provide cover. In such cases, you might need to get a commercial car insurance policy. Therefore, it's crucial to discuss this with your car insurance provider to understand the specifics of your policy.
Do you need reliable taxi insurance? Get a quote from specialist insurer Taxi Insurer today.