What Is Private Hire Insurance And Who Needs It?
In the UK and across Europe, vehicle insurance is mandatory. Most countries have laws making car insurance compulsory but there are still some such as South Africa where it is not an offence to drive without some form of cover.
Vehicle insurance, whether compulsory or not, should always be put in place as it is there to protect anyone in an accident that was no fault of their own. Insurance can cover injury, damage, and theft.
If you choose to drive without appropriate cover for your car, motorbike, or another vehicle you can face penalties and fines. If caught in the UK without car insurance you can be fined and have penalty points applied to your licence. If you have to attend court you may face disqualification and an unlimited fine. This is especially true if a serious accident were to occur.
There are, though, different types of insurance policies for vehicles and their drivers, and it is vital you select the most appropriate one to make sure you are covered. One such type is private hire insurance
What exactly is private hire insurance?
This is sometimes also known as hire and reward insurance. It is a type of insurance policy that has specifically been drawn up to provide cover for people that use their vehicle for a certain type of work.
Anyone who is pre-booked to deliver packages, food, or even transport passengers, will need to have private hire insurance in place. Regular car insurance will not provide the right type of cover for this work.
This insurance is also only for those whose services are available and booked in advance through a private hire operator. This means bookings that are taken through mobile apps, telephone calls, or other means before the pick-up. In other words, a taxi cab driver who has passengers hailing him will not be subject to private hire insurance.
Who needs private hire insurance?
Hire and reward refers to people whose employment involves them receiving payment for certain pre-booked transportation services.
The following individuals would require private hire insurance:
- Ride-share drivers
- Cab drivers
- Delivery drivers
- Couriers
- Chauffeurs
- Minicab drivers
- Amazon Flex drivers
Again, only those whose services are pre-arranged need private hire insurance. Someone operating a cab that picks passengers up off the street will need a different type of insurance policy.
Today, ride-sharing is huge, there are somewhere near 3.8 million Uber drivers around the world now, with around 45,000 in London, UK. The US remains the biggest market for ride-sharing, and Uber and Lyft dominate this region with millions of drivers operating today. All of these individuals will require private hire insurance.
If someone is driving for hire and reward then their vehicle represents their livelihood. Private hire insurance is intended to get drivers back on the road and earning again as quickly as possible.
What is the difference between this and public hire insurance?
Car insurance can get confusing at times with all the different policies that are on the market. There are multiple questions regarding policies, especially for newcomers. Do you need comprehensive car insurance, or is third-party cover enough? Is insurance required before a car is bought, or can you obtain it after? And should you choose private hire or public hire insurance?
A cab driver with private hire insurance is unable to pick up fares at taxi ranks or anyone trying to hail them down. Similarly, a taxi driver who does pick up passengers this way cannot use private hire insurance, instead, they use what is known as public hire insurance.
A private hire vehicle cannot sit in a taxi rank such as those seen at airports or railway stations, although some do on occasion. Insurance policies can become invalid when certain situations occur. For instance, if a driver on standard car insurance picked up a paying passenger their insurance policy would likely become void.
Private hire insurance is only for those who offer pre-arranged services only. And public hire insurance is for those taxi drivers who can be hailed on the street or found at taxi ranks.
What vehicles can be covered with private hire insurance?
When it is time to compare insurance companies you will see there can be big differences in what one firm will insure compared to another.
Private hire insurance is used largely by taxi drivers, and ride-share drivers. Delivery drivers will often receive the same coverage, as can couriers. But, some insurance companies refuse to cover motorbikes as they see them as a higher risk. Others will provide a separate policy for different drivers. This means you might see private hire insurance being offered alongside policies specifically aimed at Uber drivers.
In the UK it is common for private hire insurance to only be extended to vehicles that can carry 9 or fewer passengers. Therefore, mini buses can be covered, but only smaller models.
Typically, private hire insurance is available for limousines, vans, taxis or cabs, and other cars used for ride-sharing.
Are there any restrictions on private hire insurance?
All insurance policies have some restrictions in place. These are usually there to reduce the risks that insurance companies take. For instance, if someone has previously been disqualified then they potentially pose a higher risk than someone who has been safely driving for 2 decades.
Before obtaining private hire insurance, you must check to see if any licensing is needed in your region. For instance, in the UK you would need to obtain a private hire driver’s licence. In the US, things are somewhat different though. In Utah, you would need a taxi endorsement but in California, all you need is your standard personal driver’s licence.
Private hire insurance relates to the vehicle, not the driver. Therefore, you cannot use another vehicle to carry out private hire service on one policy. The vehicle must also be owned by the policyholder, or on a lease of at least 12 months.
There may be a minimum age restriction on the driver, and they may have to have held a full licence for a certain number of years. Convictions and disqualifications can also enter into play, but terms and conditions differ between insurers. There may also be a restriction on the number of passengers with some insurers putting the maximum at 4 passengers at any one time.
What does private hire insurance cover?
Private hire insurance is often available with add-ons that extend how much cover is available. The standard policy will protect both the driver and third parties if an accident occurred and it is the driver’s fault. It will also pay to repair the vehicle, or a replacement when required.
Standard private hire insurance will normally cover any theft or damage to a vehicle including vandalism and fire. Extra cover can provide assistance during a breakdown and even the use of another car or van in the event of repairs being needed. This is essential cover for anyone who relies on their vehicle to make a living.
Is all private hire insurance the same?
The basic elements of private hire insurance policies will stay the same regardless of the provider you use. But, there can be differences in the cover provided, and the cost of the policy.
Premiums differ depending on the cover and the provider, and how the fees are paid. A yearly private hire insurance policy may cost somewhere in the region of £900 to £1,000. Additional insurance services to cover breakdowns may push the premiums up, as will paying monthly instead of yearly.
Also, some insurance providers won’t offer cover to Uber drivers under private hire as they consider ride-share drivers a higher risk. Therefore, they provide cover that is specifically designed for this purpose.
Something that is being used now is vehicle telematics. This is a way to monitor certain metrics regarding a driver’s behaviour and in turn, reward them with lower premiums or fees.
How do you select the best private hire insurance?
It is always worth shopping about when looking for any insurance policy, and private hire or taxi hire insurance is no different.
Car insurance comparison sites can help individuals to select the policy that suits their needs and budget. Reviews are also very useful today as anyone can leave a glowing review or a less flattering view of their insurance company. The reputation of the insurance company matters. Do they pay out fast or do they have a history of stalling?
Checking what is included in the policy is vital too. Will the insurance company provide you with enough assistance to get you back to work swiftly? Will they cover accidental damage to your windscreen or theft?
It is also worth investigating companies that reward good driving. If you have a history of careful driving then a telematic policy may be suitable. Usage-based insurance is a way to have your premium based on how you drive instead of the usual metrics. This means you will get cheaper premiums if you drive well.
Summary
In the UK there is no possibility of driving legally without some form of vehicle insurance. Unfortunately, many still do. Private hire insurance provides vital protection for anyone involved in an accident that is the fault of the hire and reward driver.
If you had an accident while uninsured you can seize the vehicle. For someone who relies on their car or van for their livelihood, this would be disastrous.
But, private hire insurance is only for those drivers who receive bookings in advance, and should only be used as such. If you require insurance for transporting goods or passengers, then discuss with a provider which policy you need.
