A Guide for the Best Taxi Insurance

A Guide for the Best Taxi Insurance

Owning a Taxi Business

If you’d like own a taxicab business, it’s relatively easy to get started. There are only a few requirements, including your age and your criminal record. You must be between the ages of 25 and 65 and not have any prior convictions for manslaughter, weapons possession, or drug and alcohol issues. Once you are over 65, you can take a medical examination in order to receive an exemption. What you might need is a guide for the best taxi insurance.

Other basic requirements include regular maintenance to your taxi, undergoing routine inspections, operating as a fare-based driver, having a valid driver’s license with at least two years of driving experience, and (if you live in a state with a point-driven penalty system) have fewer than seven total points- five in a twelve month period.

There are many pitfalls to operating a business on the open road. There are over 5 million car accidents per year and over 2 million personal injuries. You need to make sure you and your passengers are protected if you find yourself involved in one of these accidents.

Types of Taxi Insurance

There are several different types of insurance policies that you need to consider if you want to own a taxi company. Having protection will give you the peace of mind in knowing that you, your passengers, and your vehicle are protected in case of an accident.

Taxi Insurance: This type of coverage is a form of liability protection for the drivers, the company, and the assets. It is a more expansive policy that a typical personal auto policy because it will protect against multiple passengers. The insurance company knows that a taxi is on the road more frequently than a personal car, and therefore protects against this higher risk of accidents. Taxi insurance requires that you also own a personal auto policy.

Comprehensive Policy: Owning a taxi company means facing other potential risks besides accidents on the road. Someone may vandalize or steal your taxi. There may be a fire which destroys the engine. Your taxi may be parked outside during a storm a suffer damage due to hail or a falling tree.

Business Interruption: If something happens to your or your taxi, this may interfere with your ability to conduct your business. Having a business interruption policy will help to compensate your losses.

Taxi Insurance Costs

The cost for having each of these policies depends upon several factors. The insurance company will look at your past accident record and your history of claim activity. The more claims you’ve had, the higher your premium amount. Also, the more insurance protection, the higher your bill will be.

Using Your Personal Car

You already own a car, so why not put it to good use? There are several popular mobile phone apps which promote using your personal car to make money, including Lyft, Sidecar, and Uber. These are becoming a popular alternative to traditional cab companies in metropolitan areas throughout the country.

While there are no laws against using your own car, your personal auto insurance policy will probably not be enough to cover you in the event of a loss. Your auto policy has a livery exclusion which restricts compensation for accidents that occur while you are carrying paying passengers. If you don’t notify your insurance company ahead of time that you are using your car as a side business, they will likely not pay out a claim or renew your policy.

Additionally, Consumer Reports states that these mobile apps have a $1 million excess liability insurance policy to cover passengers, “passengers, pedestrians, other cars, and property, but it doesn’t cover injuries suffered by the driver or damage to his or her car-cum-cab if there’s an accident.” Passengers and third parties are covered from injuries and property damage, but first parties (the drivers) are not.

You also need to consider collision or comprehensive coverage, which is not included in the mobile app’s liability policy. Don’t forget about uninsured/underinsured motorist coverage either!

Expanding Your Business

If your taxi business is going well, you may consider expanding by hiring more drivers. This adds to your risks and increases your potential for losses. Therefore, you need to consider purchasing specialized policies designed for your growing business, including:

Multi-Driver Policy: Once you hire additional drivers, they need to be covered under your taxi insurance as well. You can do this by extending the policy to multi-driver coverage. Each driver would then receive the same amount of coverage as what you would originally have under your single driver policy.

Employment Practices Liability: This is a type of liability insurance that covers your business if the employment practices result in a “wrongful act”.  This includes claims of sexual harassment, wrongful termination, discrimination, defamation, invasion of privacy, etc. It will cover the owners and managers in legal suits. This policy can be added to a Businessowners Policy (BOP) as an endorsement.

Potential Taxi Insurance Discounts

You might be eligible for various discounts, depending upon your past driving experience and whether or not you have owned or operated a taxi before. Sometimes, your rates may be lowered if you have had past experience driving a business-related vehicle. If you also own a home or are married, the insurance company sees this as a sign that you are responsible and are less likely to take big risks.

Speak to an Independent Insurance Agent

Talking to your local, independent insurance agent will help you to better understand the insurance policy requirements and options available to you as a taxicab owner. He or she will have the knowledge and experience in the insurance world to recommend the coverage that will suit you best.

Other Enhanced Insurance articles related to the sharing economy:

A Lyft Out of An Uber Mess

Uber, Lyft, and AIRbnb are Innovative but are they good for Society

Are Uber and Lyft Innovators or Scofflaws

You Wouldn’t Trust a Cab without Insurance Would You

The Uber Risk of the Sharing Economy

Auto Insurance Coverage for Taxis

Have Uber and Lyft Used Insurance to Their Advantage

Enhanced Insurance is not written by attorneys. If you’re looking for legal advice, you need to contact a lawyer. Further, insurance practices and forms change constantly and are varied from state to state. For definitive answers in your area, contact a local agent.

While the majority of people want an agent involved in their purchase of insurance, many people want to see if they can save money by buying direct from the insurance company. Others want to try a direct quote to make sure the premium they’re now paying through their local agent is fair. If you want a quote for your coverage, click on the competitive quote button on the right side of this page.

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