Understanding the Difference Between Personal Auto Insurance and Taxi Insurance



Are you torn between getting personal auto insurance and taxi insurance? If your car is new, and you want to use it personally and as a taxi, the recommendation is to get both. On the other hand, if you’re going to use your car for business purposes only, taxi insurance would suffice.

Getting insurance is one of the most essential parts own owning a car. Whether it’s for personal use or business, it can give you financial security when you encounter unfortunate incidents.

But before choosing one over the other, you should know the difference between the two insurance. In this article, we’ll discuss the difference between personal auto insurance and taxi insurance.

Personal Use Insurance

As the name suggests, personal use insurance or personal auto insurance is the coverage you can get for a vehicle use for personal purposes. Usually, it’s the car people use for running errands, going to school or work, and personal activities.

1. Limitations

Personal auto insurance covers personal use only. You’re not allowed to drive the vehicle for commercial use or profit. If you use it for business purposes, and you encounter an accident, the insurance will not cover the damages to your car, medical expenses of your passenger, or other third parties affected. Basically, the insurance stops the moment you use the car for profit.

In terms of why personal auto insurance won’t cover this type of accident, using a car for business purposes comes with a lot of risks. When driving a taxi, you may be on the road longer than you expect when using the car for personal agendas.

Furthermore, once you’ve been caught driving for profit without taxi insurance, you’re guaranteed to pay fines and might face other legal problems.

2. Non-Disclosure of Taxi Business

Failing to inform your current insurance provider may result in the cancellation of your policy. When that happens, you might not be able to get the claims from your initial insurance.

Meanwhile, if you have yet to get car insurance, inform the insurance broker or provider that you’re planning to use the car for business purposes. If you end up getting personal auto insurance before taxi insurance, you can ask your current provider to upgrade your policy and add taxi insurance to the coverage.


Taxi Insurance

Commercial auto insurance is the general term used for insurance for vehicles used by businesses. If you deliver packages to customers or partners, getting commercial auto insurance is a must.

On the other hand, taxi insurance is a more specific type of insurance you should get if you’re planning to take passengers and drive them from one place to another.

1. Coverage

Another thing you should decide when getting taxi insurance is if it’s going to be a private hire or a public hire taxi.

A private hire taxi is booked in advance, while a public hire taxi is the one you can hail on the streets without prior arrangements. Usually, public hire taxis have metre taxis on them to identify the price of the fare. Meanwhile, since more private taxis are booked via apps, the fare price is already determined before travel.

Once you identify which of the two you prefer in your taxi business, you can start looking for your ideal taxi insurance provider. Usually, public hire taxi insurance is more expensive than private hire due to higher risks on the road.

2. Legal Compliance

If you want to drive a taxi in the UK and other countries, at least get the minimum taxi insurance coverage, third party only. The third-party-only coverage, as the name suggests, protects from damages or injuries during an accident. However, this doesn’t include the damages to your vehicle and the medical assistance in case you have injuries.

Aside from the third-party-only coverage, you can also choose third-party, fire & theft, and comprehensive. The third party, fire & theft coverage includes financial assistance for third parties (including the passengers, pedestrians, and property damages), and assistance for your vehicle in case it encounters fire or theft.

Lastly, comprehensive taxi insurance covers the third parties, your car, and the driver. Basically, it’s the combination of all types of taxi insurance coverage.


3. Passenger Coverage

Although comprehensive insurance covers it all, another must-add to your taxi insurance is public liability insurance. It covers more than comprehensive insurance can in terms of lawsuits and serious injuries.

Keep in mind that there are many ways the passengers can encounter injuries, whether they’re entering, leaving, or inside the taxi, they can still be injured. So if you don’t want to pay out of pocket in case of emergencies, invest in public liability insurance.

Final thoughts

Although personal use insurance and taxi insurance have their differences, they also have similarities. Some of these include:

  • Option to customise based on your needs and preferences
  • Assist financially in case of emergencies
  • Can be added on top of the other. If you have personal auto insurance, you can still avail of taxi insurance for the same car, and vice versa.

Meanwhile, understanding the differences between the types of car insurance can help protect your car and the individual in and out of the vehicle.

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