Everything You Should Know About Taxi Insurance

The type of motor insurance you buy for your car depends on the intended use of the car. Suppose you have purchased a car for personal use, you will register it as so. Thus, the insurance policy you buy for it will also be such that it is meant for a vehicle that is registered for personal use. Similarly, when buying a car for commercial use, like a taxi, you will register it as such. In this case, the policy you will need to buy for this car is a commercial vehicle insurance policy. This term can refer to a third-party liability policy as well as a comprehensive insurance policy. It encompasses almost all sorts of motor insurance plans available for commercial vehicles. Taxi insurance is a rather colloquial term for insurance policies that are available for commercial vehicles, specifically taxis or cabs. If you own a taxi and are looking for a new insurance policy for it, or to renew your existing one, you can look for commercial four-wheeler insurance. Note that commercial vehicle insurance can mean insurance for any vehicle that is classified as commercial.

Features of Taxi Insurance

1. Third-Party Liability Coverage – Covers legal and financial liabilities for third-party injuries, deaths, or property damage caused by the taxi.
2. Own Damage Cover – Protects against damages to the taxi due to accidents, fire, theft, natural calamities, and vandalism.
3. Passenger Cover – Provides compensation for injuries or death of passengers traveling in the taxi during an accident.
4. Personal Accident Cover for Driver – Offers financial protection to the taxi driver in case of accidental disability or death.
5. Zero Depreciation Add-On – Ensures full claim settlement without considering depreciation deductions on replaced parts.
6. Loss of Income Cover – Provides compensation for loss of earnings if the taxi is under repair after an accident.
7. Roadside Assistance – Helps with emergency services like towing, fuel refills, flat tire repairs, and battery jump-starts.
8. Engine Protection Cover – Covers engine damage due to waterlogging, oil leakage, or mechanical failures.
9. Key Replacement Cover – Reimburses the cost of replacing lost or stolen taxi keys.
10. Legal Liability for Paid Driver – Covers legal responsibilities towards the driver employed to operate the taxi.

Benefits of Having Taxi Insurance

There are two types of policies you can buy for your taxi – third-party liability coverage and comprehensive motor insurance. Of these, a third-party liability policy is mandatory as per the Motor Vehicles Act, 1988. On the other hand, a comprehensive insurance policy is an optional but advisable purchase. Let’s understand the benefits of having insurance for your taxi, be it a third-party cover or a comprehensive one.

1. With third-party coverage, you can protect yourself against financial liability if your vehicle was ever involved in an incident where damage is caused to someone else’s vehicle.
2. With own damage cover, financial protection is possible in cases where your vehicle is damaged. The cost of repairs of the parts or their replacement can be claimed with this policy.
3. Comprehensive insurance also comes with personal accident cover. If you were to encounter permanent disability or death due to an accident where your car is involved, you or your nominee can make a claim and expect a pay-out.
4. When buying taxi insurance, you may also want to consider add-ons. For example, you could opt for a consumables add-on cover, which would cover the cost of consumables such as nuts and bolts, engine oil, and brake oil. This may bring down your share of the costs of repairs that you may have to endure after an event that is covered by your policy.
5. You can claim cashless claim settlement, so your claim is settled directly between the company and the garage.
6. You can opt for some of the network garages without having to worry about the cost.

Inclusions of Taxi Insurance

The common inclusions of comprehensive commercial vehicle insurance are as follows:

1. Own damage cover
2. Third-party liability cover
3. Personal accident cover
4. Any other add-on that the policyholder has opted for
5. Coverage against natural disasters
6. Coverage against terrorist activities, theft, and riots
7. Coverage against damage during transit by rail, road, waterway, etc.

To get a better idea of policy inclusions, it is ideal to go through the policy document and details, as the minutiae of a plan may differ across providers.

Exclusions of Taxi Insurance

1.  Any damage caused if the vehicle was under the influence of drugs or alcohol
2. Routine damages to the taxi caused by regular wear and tear
3. Any damage caused due to negligence
4. Depreciation of the vehicle and its parts, unless the taxi is covered with zero depreciation
5. Any damage that is caused outside the geographical area
6. Any damage caused when the driver was found driving without a valid licence

Need for Taxi Insurance

1. Third-Party Liability Insurance: Covers legal and financial liabilities arising from injuries, death, or property damage caused to a third party due to an accident involving the insured taxi. This is mandatory under the Motor Vehicles Act.
2. Comprehensive Taxi Insurance: Provides extensive coverage, including third-party liabilities and own damage protection. It covers accidents, theft, natural disasters, fire, and vandalism, ensuring financial security for taxi owners.
3. Private Hire Taxi Insurance: Designed for taxis that are pre-booked and cannot be hailed on the street. It covers both third-party claims and damages to the insured vehicle, ensuring protection for drivers operating on an appointment basis.
4. Public Hire Taxi Insurance: Suitable for taxis that can be flagged down on the street or at taxi stands. It offers protection against accidental damages, third-party liabilities, and potential risks associated with high passenger turnover.
5. Fleet Taxi Insurance: Ideal for businesses operating multiple taxis. It provides coverage for an entire fleet under a single policy, reducing administrative hassles and ensuring cost-effective protection for all vehicles.
6. Personal Accident Cover: Offers financial assistance in case of injury, disability, or death of the driver or passengers due to an accident. Some policies also provide compensation for medical expenses and hospitalization.

How to Buy and Renew Taxi Insurance?

Since most insurance policies these days are available online, the buying and renewing process has become quite easy. If you are buying or renewing motor insurance for your taxi online, you can do it in the following ways:

1. Online: via insurance provider website or app
2. Offline: via insurance agent

Once you get the policy copy, you can either print this out or contact your insurance provider to check whether they provide a hard copy of the same.

Making Claims for Commercial Vehicle Insurance

Following an event that is covered by your policy, you can initiate a vehicle insurance claim through any of the various channels provided by your insurance provider. The most commonly available channels are:

1. Via call
2. Via app
3. Via website
4. Through your insurance agent

When you use these channels to make a vehicle insurance claim, ensure that you have a copy of your policy as well as personal details handy. Getting taxi insurance is a requirement. It is also a way to protect yourself financially if your taxi were to meet an accident or any such unfortunate event.

How to Choose the Right Taxi/Cab Insurance?

1. Understand Legal Requirements

Taxi insurance is legally required for all commercial vehicles. Operating a taxi without proper insurance can lead to heavy penalties, fines, or even vehicle seizure. It is crucial to check local regulations and ensure your policy meets the mandatory coverage criteria.

2. Choose Between Third-Party and Comprehensive Insurance

Third-party insurance is the most basic form of coverage, providing financial protection against damages caused to other vehicles, property, or individuals. However, it does not cover your taxi. On the other hand, comprehensive insurance includes third-party coverage along with protection for your taxi against accidents, theft, fire, and natural disasters. If you want full financial security, a comprehensive policy is the better option.

3. Evaluate Coverage Options

Not all policies offer the same benefits. Some include additional coverage such as zero depreciation, engine protection, roadside assistance, and personal accident cover for both the driver and passengers. It is important to assess your taxi’s risk exposure and select coverage options that best fit your needs.

4. Compare Premium Costs

Since taxis are used frequently and cover longer distances, their insurance premiums tend to be higher than private cars. To find the best deal, compare quotes from multiple insurers. Some providers offer discounts for safe drivers, bulk policy purchases for fleets, or those with a good claims history.

5. Check Claim Settlement Ratio and Process

The claim settlement ratio (CSR) indicates the likelihood of your claims being processed without hassle. A high CSR means the insurer settles most claims successfully. Additionally, review the insurer’s claim filing process—whether they offer a cashless repair facility, digital claim processing, and quick approvals—so you can avoid delays when you need coverage the most.

6. Consider No Claim Bonus (NCB) Benefits

If you do not make any claims in a policy year, you can avail of a No Claim Bonus (NCB), which reduces your renewal premium. The longer you go without claims, the higher the discount. Some insurers even allow NCB transfer when switching providers, helping you save money on your new policy.

7. Look for Customization Options

Taxi businesses have unique needs, and having customizable policies can be beneficial. If you own multiple taxis, opting for fleet insurance can reduce costs. Add-ons like loss of income cover can provide compensation if your taxi is off the road due to an accident or breakdown.

8. Check the Insurer’s Customer Support

Reliable customer support is essential, especially in emergencies. Choose an insurer that offers 24/7 assistance for accidents, claims, and roadside services. Having quick support ensures that your taxi is back on the road as soon as possible, minimizing business disruptions. By considering these factors, you can select the right taxi insurance policy that provides adequate protection, cost savings, and seamless claim handling for your business.

FAQs

Can I use third-party insurance for a taxi?

Yes, third-party insurance is the minimum legal requirement for taxis. It covers liabilities related to injury, death, or property damage caused to a third party in an accident. However, it does not cover damages to your taxi.

Can I get temporary insurance on a taxi?

Yes, temporary taxi insurance is available for short-term needs, such as rental taxis or seasonal drivers. These policies typically last from a single day to a few months and provide flexible coverage options.

Can I insure an old taxi car?

Yes, an old taxi can be insured, but the premium depends on factors like the vehicle's age, condition, and Insured Declared Value (IDV). Some insurers may have restrictions on very old taxis, but comprehensive and third-party policies are available.

How to calculate the taxi insurance premium price?

The taxi insurance premium is calculated based on factors like the vehicle’s IDV, age, location, type of coverage, usage frequency, claim history, and any add-ons. Online insurance calculators can provide an estimated premium amount.

How to get the lowest taxi insurance price?

To reduce taxi insurance costs, compare multiple insurers, opt for higher voluntary deductibles, maintain a no-claim record, install safety features, and avoid unnecessary add-ons. Fleet insurance can also help reduce costs for multiple taxis.

Is it mandatory to have commercial insurance for a taxi/cab?

Yes, commercial vehicle insurance is mandatory for all taxis and cabs as per the Motor Vehicles Act. A personal car insurance policy is not valid for taxis used for commercial purposes.

What should I do if my taxi gets into an accident?

In case of an accident, ensure the safety of passengers, inform the police if required, document the damage, and notify your insurance provider. File a claim with necessary documents, including an FIR (if applicable), photos, and repair estimates.

How much does it cost to insure a taxi?

The cost of taxi insurance varies based on factors like the type of policy, location, taxi model, coverage options, and insurer. On average, premiums range from a few thousand to several lakhs per year, depending on the coverage and add-ons selected. * Standard T&C apply Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.