November 10th, 2011
So you want to be a taxi driver. You’re all ready for the evenings of intrigue, the obscure bathroom breaks, the uneven tips, the spills in the backseat, the... interesting conversations. Your licence is all squared away and now you just need to figure out the deal with cab insurance.
So... what's the deal with taxi cab insurance?"
Individual cab drivers must insure themselves against damages and injury. The two main types are private hire and public hire insurance.
Private hire insurance is for drivers and vehicles that require specific booking and cannot operation with a taxi sign that solicits customers. "Livery cabs" and limousine require private hire insurance.
Public hire insurance is for those who can pickup riders and use a signaling availability -- traditionally yellow cabs.
A much bigger challenge is getting a medallion, which represents physical evidence of your taxicab license and allows you to pick up hailing customers. Medallions can be extremely expensive -- up to $600,000 for a single individual-owned medallion in New York. Because of the astronomical cost, corporations are often the ones who actually purchase the medallions, and then lease them out to drivers. Not all cities use the medallion system, but the ones with the most cabs do.
Your employer will also be responsible for the insurance on the vehicle. They will most often insure the same fleet under the same policy. Insurance for taxi companies is often extremely expensive because the policy has to cover the numerous and varying passengers in the cabs, plus the extra miles that almost all cabs drive in a given year. If you’re an independent driver you’ll still have to pay extra when you register under public or private hire.
There are a lot of costs associated with driving a cab; its a low-margin business. Besides the cost of the medallion, gas, maintenance and car insurance will also strain your wallet.
Please Note -- CoverHound does not currently offer livery insurance, which is what will be required for you to be properly insured as a taxi driver. We recommend doing a search for livery insurance on Google if that is what you are looking for.