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.
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.
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 cover you add to your policy when you buy 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 personal accident insurance and loss of income.
Insurance costs also vary for private hire (minicabs) and public hire (taxi rank vehicles).
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.
As you’d expect, insurers recognise that experience is important.
A young 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 drivers with little experience pay the most for insurance.
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.
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 customers 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.
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 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 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.
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.
Do you need reliable taxi insurance? Get a quote from specialist insurer Taxi Insurer today.