THE TAXI INSURER: Which factors are driving rising taxi insurance premiums and how are they impacting taxi and PHV drivers?
- The Taxi Insurer
- Oct 1
- 3 min read
Although motor insurance premiums have declined by 10% in the past year, that's not the case in the taxi industry, where the cost of cover remains significantly higher. There are several reasons for this disparity.
First, due to the high proportion of time when their vehicle is being driven, taxi and PHV drivers are associated with a significantly higher rate of personal injury than their private car counterparts.
Second, taxi and PHV drivers carry many more passengers than private car drivers. Those passengers can get injured while they're in the vehicle, or getting into or out of it.
Third, in comparison to private cars, taxis and private hire vehicles (PHVs) are a fairly limited market. The taxi customer simply doesn't have the wide range of insurers to go to for a quotation that a private car customer does.
There are other factors influencing taxi insurance premiums, although these affect the motor industry more widely. One of the main ones is higher vehicle repair costs, which have risen by £100 million in Q2 this year when compared to Q1.
Modern vehicles are becoming increasingly complex, as they are packed with sensors and advanced electronics. They need specially trained technicians, armed with dedicated parts and equipment, to repair them, all of which increases repair times and pushes up costs.
Another reason for the rise in premiums is the higher value of second-hand vehicles, including courtesy cars, stemming from the shortage of new vehicles and parts in the wake of the COVID pandemic. A lack of appropriate courtesy cars while a main vehicle is being repaired makes the replacement more expensive. Added to that, longer repair times mean drivers are spending longer with a courtesy car, further adding to claims inflation.
Why is black cab insurance cheaper than PHV cover?
Insurance for hackney carriage vehicles tends to be cheaper than for private hire vehicles. This is partly because of the nature of the vehicles concerned, but also because of the way the drivers of those two types of vehicle are viewed by insurers and the taxi industry in general.
Hackney carriage vehicles are generally LTI models – what Londoners would recognise as a black cab. They're slower vehicles and wouldn’t be considered high-performance by any stretch of the imagination. In contrast, a PHV driver could be sat behind the wheel of a BMW or a Mercedes – a much quicker and more powerful vehicle altogether.
Rightly or wrongly, both the taxi industry and taxi insurance providers regard hackney carriage drivers as more professional, as they've normally gone through more stringent tests and tend to work full-time. PHV drivers, on the other hand, often work part-time, sometimes as a second job, and won’t usually have been subject to the same level of testing as hackney carriage drivers.
The impact of rising premiums
Rising insurance premiums are causing taxi and PHV drivers to work longer hours to cover the extra cost. These extra hours, in turn, are increasing drivers’ road exposure, raising their chances of being involved in an accident.
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If drivers have to report an incident to their insurance provider, whether they are at fault or not, it’s likely to raise the cost of their premium at renewal.
Drivers and fleet managers struggling with rising premiums can seek expert guidance from taxi insurance brokers. These specialists have spent years nurturing relationships with a trusted panel of insurer partners, and focus on finding products and policies that meet their clients’ requirements and expectations.
