Why are taxi insurance premiums rising?
There are several factors that have pushed up the price of taxi insurance – and all motor insurance – in recent years. The main reasons are the ongoing cost-of-living crisis, inflation, and the higher cost of repairs.
Vehicle repair costs
While higher energy bills and other increased costs have seen businesses’ running costs increase, forcing them to put up prices, the Association of British Insurers (ABI) found that the main reason behind higher insurance premiums is higher vehicle repair costs.
As well as general costs and parts prices, the association found that modern cars, especially electric vehicles, require specialist equipment, parts and training to repair – further pushing up the cost. The ABI found that EVs cost 25% more than petrol or diesel cars to repair and that repairs take 14% longer to complete.
Value of second-hand vehicles
Another factor that has pushed up the price of public hire taxi insurance and private hire taxi insurance is the higher value of second-hand vehicles, including courtesy cars, caused by shortages of parts and new vehicles following the pandemic. The limited availability of suitable courtesy cars while a vehicle is in for repairs increases the cost of the replacement while the main vehicle is in the garage. And longer repair times mean longer with a courtesy car and a more expensive claim.
Rising number of claims
As well as the cost of each claim going up, the ABI has also seen an increase in the number of insurance claims, with insurers reporting that payout and claim costs were higher than the premiums collected, forcing them to put up the cost of cover, including taxi insurance.
Driving down the cost
Depending on your insurance provider, there are steps you could take to help lower the cost of your taxi insurance premiums.
Choose the right vehicle
One of the first savings you could make is choosing a vehicle in a low insurance group. Cheaper vehicles typically cost less to insure, as well as having lower running costs and repair bills. It’s also worth making sure that while you have the features and options you need to run your taxi business, try to avoid extra modifications which can add to the cost and are more expensive to replace.
Install a dash-cam
One piece of equipment that can prove invaluable in the event of a claim is a dash-cam, which provides your insurers with the evidence they need to determine liability in the event of a claim, especially if there are no independent witnesses.
Use a broker
Having secured an affordable and efficient vehicle, a good way to find savings is to use a taxi insurance broker, such as Patons Insurance, which has access to multiple specialist insurers and can find the right insurance for your business.
Pay annually
Choosing to pay annually instead of monthly means you avoid paying interest on premiums, which reduces the cost of your annual cover.
Keep your vehicle safe
Keeping your vehicle safe – such as parking on a driveway or locked garage when it is not being used – could reduce the risk of damage or theft, which can lower premiums, depending on the insurer.
Making your car more difficult to steal could also help reduce premiums – as long as you make sure you are using approved alarms and anti-theft devices and tell your insurer or broker about them.
Increase your excess
Drivers who increase the voluntary excess they pay on their policy can also reduce their premiums because it means that, in the event of a claim, the insurer pays out less.
Build your No Claims Discount (NCD)
As well as taking these steps, having another year of claims-free motoring under your belt is another plus for insurers. The more you build up your no-claims discount, the more you can expect to save on your taxi insurance premiums. And, the longer your claims-free driving history, the less of a risk you are classed as by insurers.
Conclusion
Taxi drivers are classed as a higher insurance risk because they spend more time on the road and often operate in busy towns and cities. The best way to reduce the cost of your taxi insurance is to work with your insurance broker to make sure you have the right cover for your business, at the best price.
