Turning your vehicle into an income-generating machine like a taxi can be lucrative, especially since the demand has picked up since last year.
In London alone, over 3 million passengers use public transport daily, an attractive market for taxi drivers, whether private hire or otherwise. Additionally, there were 40.7 million licensed vehicles in the UK as of June 2022, representing a 0.6% increase from the previous year, according to transport policy and research group the RAC Foundation.
Car owners and drivers remain responsible for keeping their passengers safe despite these shifts. Hence, insurance coverage is legally required whether you’re an experienced or rookie driver. Getting one is a substantial investment, but there are ways to work around it, like having Zego’s insurance for private hire Uber taxi drivers.
Performing due diligence is key to reducing insurance costs. Understand what affects insurance prices and get valuable money-saving tips in this article.
Factors That Affect Insurance Costs
Several factors are taken into consideration when insurance companies calculate your premium costs. That’s why you’ll often end up having slight price differences from firm to firm.
Regardless, understanding the essential aspects of assessing insurance risk typically involves the following:
- Insurer’s age: According to a study, young male drivers are four times more likely to get killed or severely injured on the road than those over 25. Thus, young drivers are deemed at a higher risk and pay more.
- Intended use: Private hire taxi owners pay less than public taxis because of security risks. Having a booking is safer than picking up random passengers on the street.
- Vehicle type: Smaller vehicles are typically cheaper to insure than bigger units or state-of-the-art and newly released models.
- Mileage: The more miles you rack up, the higher the risk of getting involved in an accident. Some insurers offer discounts if you take a restricted mileage policy, but this might invalidate a claim once you’ve exceeded the limit.
- Location and coverage: Your area of operations can also influence your insurance costs, and those in urban areas have an increased risk of road accidents. The applicant’s residential location is a factor too, as your vehicle becomes more prone to vandalism, theft, and other crimes in less secure communities.
- Safety: Besides your residence, the insurer will look into your working hours, where you keep your taxi, and the security systems installed in your vehicle. A driver who works late, doesn’t have a secured garage, and doesn’t bother to have tracking and alarm systems, automatic locks, and other security devices charge more. Your driving history also influences your costs, so always prioritise safety.
- Modifications: Any changes you’ve made to your car, regardless of the purpose, will be subject to increased premium costs.
Apart from looking at these factors, your premium costs will depend on external factors, such as the insurer’s profile. Established companies generally have higher policy rates than start-ups.
Taxi Insurance Tips For Novice Drivers
From the discussion above, you can surmise that some cost factors may be difficult to manage, especially if you’re a novice driver. New drivers are considered at higher risk of accidents, but you can check out these suggestions to lower costs.
Shop Around And Compare
While the best option is to purchase from industry giants, considering other providers may be worth it. Firms like Zego often have exclusive deals or offer intuitive solutions, for instance, easily linking your Zego app to Uber for an overview of your policy details on the go.
So, don’t be in a rush and jump at the first taxi insurance offer that comes your way if you want to avoid overpaying. Do your homework instead and shop around for the best deals. Get at least three quotes and compare them.
Understand The Insurance Policy Well
It’s equally important to understand the right type of car insurance and the protection they provide. For instance, there might be slight coverage and premium differences between a public hire and a private hire taxi.
Moreover, familiarise yourself with these common terms and find out how you can use them to your advantage:
If you’re planning to share the driving duties with a family member or a friend, you must include the other person when applying for a taxi or private hire vehicle. The same cost factors and coverage apply to all drivers, so you can increase or decrease your insurance costs when taking this route.
Providers will assess the driver separately. For example, if you add a more experienced motorist who hasn’t filed a claim or been in an accident, you’ll pay less than adding a novice driver like yourself.
Most companies offer no-claims bonuses to encourage new drivers to prioritise safety. Motorists who accumulate these bonuses within a certain period are qualified to lower their rates at renewal. Conversely, you lose your no-claims bonus for every reckless driving incident and other traffic conviction. Some providers offer this transferable no-claims bonus, while some don’t. Conditions vary from company to company, so don’t hesitate to ask.
Voluntary excess represents the amount a policyholder is willing to pay toward the claim costs. Therefore, it’s an additional payment that increases your claim amount and reduces your premium payments. However, you can’t get the extra fees back if you don’t file a claim, so you can end up putting too much money on the table.
Understanding the policy helps you avoid surprises when it’s time to file a claim. Generally, lower policy costs mean low coverage and several restrictions.
Avail of a Short-Term Insurance
As a new motorist, availing of short-term insurance could serve you well, especially if you’re only driving to supplement your income. Temporary taxi insurance is also helpful if you’re unsure whether to keep moving private hire cars long-term or when you’re not sure about the best insurance company to purchase a policy from.
Choose a Smaller Car
Luxury and bigger cars cost more to insure than smaller cars. Furthermore, most taxis have limited seating capacity. Plus, smaller vehicles have lower fuel consumption, have increased mobility around towns and cities, and can be parked more easily. New drivers can operate small cars better than bigger cars, leading to a safer ride.
Always Secure Your Vehicle
Aside from prioritising safety on the road, keeping your vehicle secure can positively impact your insurance coverage and lower your premium cost. It pays to purchase a car with a high Euro NCAP rating before converting it into a private hire taxi. These automobiles often have built-in safety devices that reduce the risk of theft and other crimes.
As a new taxi driver, you must keep the vehicle safe in the garage or other places with safe parking spaces. Installing a tracking device is also a good idea, with some insurers citing it as a pre-requisite before sending a quote.
Like business insurance, taxi insurance is a legal requirement in most, if not all, countries. As a new driver, expect to pay more than experienced drivers. Still, you can limit your costs by having essential information about how insurance costs are decided – most of which is discussed in this article.
In addition to knowing the cost factors, shopping around for the best deals, and choosing the right insurance and vehicles, you must prioritise safety on and off the road. Doing so reduces your risk and your premiums down the road.