Taxis must be insured with either private hire or public hire taxi insurance. This form of vehicle insurance is a minimum requirement to drive legally on the road.
According to the NimbleFins taxi insurance guide, it is not legal to add ‘business use’ insurance to regular social, domestic & pleasure car insurance and then use this car as a taxi. Business use is for vehicles that are being used for business purposes, such as travelling to different business locations or travelling to meet with clients outside of a fixed place of work. But business use does not sufficiently cover taxis or, in fact, any driving where a customer is paying for the trip.
Vehicle insurance aside, there is at least one form of ‘business insurance’ that a taxi should get: public liability insurance. Public liability insurance covers situations where a member of the public, such as a customer, claims a business (e.g. a taxi) has caused personal injury or property damage.
Public liability is included in many taxi insurance policies; where it’s not, coverage can be purchased separately.
In addition, a larger taxi business would need other forms of business insurance. For example, any business with employees must, by law, have employers’ liability insurance. Furthermore, cyber insurance can help protect against customer databases being hacked, risking personal and financial information, or other cybercrimes. Legal expenses cover can help with HMRC investigations, contract disputes, etc. And a taxi business with premises will surely need contents insurance and commercial building insurance if they own the premises.
What insurance should a taxi have?
Taxis need either public or private hire taxi insurance, which are forms of hire & reward insurance. Hire & reward insurance is needed for any vehicle being used for a rewarding purpose at the time of the journey. This would include a customer paying for taxi service (as well as food delivery, moving vans, etc.)
If a member of the public is paying – or rewarding a person or business – for a specific journey that is being made, then hire and reward insurance is required.
With regards to taxi insurance, the hire and reward options are referred to as public hire and private hire. The differences are subtle, but it is important to make sure you know which one you need.
The type of insurance will be linked to the licence. Read more about private hire driver licences and public hire taxi licences at Transport for London.
Private hire taxi insurance
Private hire taxi insurance will only cover taxis where the customer has prebooked, such as through an app or over the phone. Private hire taxi insurance does not cover pick up customers roadside.
Public hire taxi insurance
On the other hand, public hire taxi insurance covers taxis that pick up passengers who have hailed them down in the road. Public hire taxi insurance includes the same coverages as private hire but additionally protects against the risks of picking up passengers from the roadside or busy taxi ranks.
Picking up passengers from the roadside can be riskier, so public hire taxi insurance typically costs more than private hire taxi insurance.
Public liability insurance
In addition to vehicle insurance in the form of private or public hire, taxi drivers should also have public liability insurance. This is a popular form of business insurance that is held by a wide range of businesses that have dealings with the public. Suppose a passenger is injured getting in or out of a taxi or whilst getting luggage in or out of the boot. In that case, public liability insurance can help protect the taxi company and driver against liability claims made by the passenger. It also funded a legal defence to defend against a claim, even if the claim is frivolous.
Do taxi drivers need public liability insurance?
While it’s not a legal requirement, taxi drivers should have public liability insurance. While taxi insurance protects customers from injury while you’re driving through the 3rd party liability element of cover, public liability protects you if a customer suffers a personal injury or property damage while entering or leaving your taxi, for example, while putting bags in the boot. It will cover legal costs to defend a claim as well as compensation claims you’re found liable to pay.
Most taxi insurance policies will include public liability as standard, but not all do, so check the policy carefully. If your taxi insurance doesn’t include public liability, then it’s easy to buy a separate, standalone public liability insurance policy. Public liability is one of the most common forms of business insurance in the UK.