When you think of a taxi cab, you might think of the traditional yellow cab, but they are not the only ones that are considered taxis for the purpose of insurance. Other services that provide the same service of driving someone from one place to another also qualify as taxis, with some being personal vehicles that are used for this purpose and others being company-owned vehicles that are driven by employees. All of these things have one thing in common: They all require commercial insurance coverage.
Commercial vs. Personal Insurance
The first thing you will notice about commercial insurance is that it is higher than personal insurance, and in some cases, the difference can be very large indeed. There are several reasons for this:
- There are higher limits that are allowed on commercial insurance because there is a higher amount of risk involved.
- Commercial policies typically have standard deductibles, which are typically higher than those offered for personal insurance.
- Commercial insurance may cover some of the loss of income in the event of a covered loss of a vehicle.
You only need commercial insurance on your own personal vehicle if you are regularly driving others around for a fee and if you advertise your vehicle for such a service. This should not be confused with people who drive their own vehicles as a professional driver under a company name. For instance, an Uber driver may be able to get a different type of insurance than those of a taxi cab. One company offers a flexible type of insurance coverage that allows the driver to pay a much lower rate when they are driving their car for personal use rather than as an Uber driver.
When the Cab Is Company Owned
If you are a taxi cab driver that works for a company, you will typically go to work, pick up a cab that may or may not be marked or designated as a taxi cab, and then pick up fares for your scheduled shift. The company will cover the cost of commercial insurance on that vehicle, which should also cover you as the driver in case there is an accident that involves injury to you, your passengers, or any other drivers. However, some companies may also require you to carry your own personal insurance as a driver of a vehicle while you are driving their cab. Your own auto insurance should cover that requirement unless you have very limited coverage. Most insurance covers you as a driver in any vehicle. Always check with an agent to be sure that your coverage is valid for another vehicle, or you may need to consider an upgrade.
If You Are the Company Owner
The more vehicles that you must cover, the more you will want to search for the best coverage at the best rate. Commercial insurance, especially for taxi cabs, may have different requirements from state to state, so it is important to speak to a local agent about your coverage needs and then to compare rates so that you are paying the lowest premium for the coverage you need. Some of the requirements that you may be faced with include:
- Coverage for all drivers. You will have to list everyone that is authorized to drive your cabs in a professional capacity. You may also have to list drivers that may be driving other vehicles even if they are only driving for recreation or personal needs.
- Garage facilities. Some companies will require that vehicles that are listed on the commercial policy be kept in a garage or other structure.
- There may also be requirements for security at the garage so that vehicles are not easily removed by unauthorized people.
Single Policy vs. Multiple Policies
For the commercial cab company, the taxi insurance is usually written for the entire company rather than per vehicle. The insurance company may use an average value of the cabs to determine the coverage amounts and then will use the highest rate for the drivers. This can be different from agency to agency and each policy is written specifically for the company in question, so always discuss needs and coverage levels with your agent.
Having multiple policies can be beneficial if you have a wide range of vehicles with varying levels of condition or values. However, if most of your taxi cabs are in the same or similar condition and come from the same model year (with one or two years’ fluctuation) then it is easier to just use a single blanket policy that covers the cars themselves and the drivers. These policies will also cover the passengers in the vehicle plus any other vehicles or other property damaged in the event of an accident.
Your taxi cab insurance should also cover the vehicles in the event of damage to the garage itself, for instance, during a tornado or another type of natural disaster.
Getting Quotes and Comparing Prices
The most important thing that you can do is to get several comprehensive quotes so that you can compare coverage, pricing, and deductibles. You can also compare customer service and other factors while you are at it. Remember, commercial insurance will be considerably more expensive than personal insurance, so be prepared for that. You will also need much higher limits for the various types of coverage as well. You will need to be sure that you are covered not only to satisfy state requirements but to protect your company and your investments. A loss is not only going to affect you professionally but can also cause issues on a personal level, especially if you do not have the insurance to cover that loss. An injured person could possibly sue you to make up for their own losses, which could hit your personal bank account if your business cannot cover the costs. It is always best to protect yourself as much as possible with the right level of commercial auto insurance.