Auto Insurance for Taxi and Limo Drivers

You won't be surprised to learn that car insurance for taxi and limo drivers is more expensive and complicated than average car insurance. Special commercial car insurance is required, and along with special insurance comes unique rules and regulations.

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Jul 16, 2021

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Overview

  • Special commercial auto insurance is required for taxi cab and limo drivers.
  • Taxi insurance comes with unique rules and requirements.
  • Stringent rules exist in order to qualify for taxi insurance.
  • Personal auto insurance will not provide adequate coverage for taxi, limo, or ridesharing drivers.

Driving a taxi or limo can be a great way to earn income. Whether you drive for a large company with a huge fleet, a small business with only a few cars, or for yourself with a single car at your disposal, you’ll need a special type of commercial auto insurance in order to be fully protected. 

The basic types of auto insurance won’t do. With the right tools to help you carefully explore a variety of quotes, it’s possible to find affordable taxi insurance to fit your needs.

Compare taxi insurance quotes today by entering your ZIP code into our free comparison tool.

Is there special insurance for taxi and limo drivers?

There are special types of insurance coverage designed to protect taxi and limo drivers, their vehicles, and their passengers. The two most common types are standard commercial insurance and livery insurance. Although many drivers use commercial auto insurance for taxi service, commercial insurance and livery insurance are not the same. 

What is commercial auto insurance?

Commercial auto insurance is a more broad term for the type of insurance that will cover your vehicle if it is used for commercial, i.e., business, purposes. Commercial auto insurance is appropriate for delivery vehicles, tow-trucks, for-hire services, and other vehicles used for business purposes. Commercial insurance is mandatory if you use your vehicle for any type of business purpose that picks up or delivers goods.

What is livery insurance?

Livery insurance is a type of commercial auto insurance for businesses that transport people on a for-hire basis. Commercial livery insurance is a specific type of commercial auto insurance aimed at for-hire services such as limos and taxis, as well as some ride-sharing platforms. As such, taxis, limos, town cars, black cars, and rideshare cars all can be considered livery vehicles for which livery insurance would be appropriate.

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Are there special requirements to obtain taxi cab insurance?

As stated above, any insurance purchased for a car primarily used for business falls under the category of commercial auto insurance. Your basic auto insurance policy with standard liability coverage won’t be sufficient if you drive a car for business operations. Company cars require commercial auto insurance, but taxi cabs, limos, and other livery vehicles come with unique risks and, therefore, have specific requirements.

It is more likely than not that your city and/or state have special requirements for taxi and limo drivers, as well as for the minimum insurance coverage they need to have. While regulations vary depending on the city and state of operation, here are some common taxi cab insurance requirements.

Age of Driver

Most jurisdictions have age restrictions on who can drive a cab. Typically, drivers must be at least 25 years old to drive a taxi. Also, standard approval for coverage cuts off at 65 years of age. Drivers over the age of 65 may still be approved for insurance coverage, but they most likely would be required to pass a medical examination.

Driving History

Infractions on a taxi driver’s record can do more than increase his or her premiums. After a certain threshold is met, then the driver becomes absolutely ineligible.

Condition of Vehicle

Some jurisdictions put restrictions on the type of cars that can be used as taxi cabs. Older restored and repaired vehicles may not be acceptable. All livery cars should have functioning seatbelts and other safety features and equipment. Some municipalities even require that taxicabs be certain colors or display certain on duty/off duty signage.

Coverage Requirements and Limits

AutoInsurance.org says that taxi insurance generally must cover a number of different liabilities including:

  • Personal injury protection;
  • Property damage liability;
  • Medical cost insurance; and
  • Uninsured/Underinsured motorist coverage

The specific liability limits for the various coverage requirements will depend on where you operate your taxi or limo, but wherever you drive, you will be required to maintain minimums for the death or injury of a non-passenger, for the total deaths or injuries of passenger occupants, and for property damage.

Regardless of what the city or state minimums are, taxi and limo drivers should look for the best coverage based on their particular financial risks. For taxi drivers in large cities, the requirements for minimum coverage will likely be high. That’s because big cities come with more risk, like more cars, bikes, and pedestrians sharing the road. The probability of an accident also increases due to the distractions that are prevalent in large towns. Insurance coverage would likely be more expensive in a bustling urban location than in a small town.

Are there other types of insurance coverage for taxis?

Depending on the particular commercial livery policy, there are some unique options taxi and limo drivers should consider.

Accessories Insurance

Accessories insurance for drivers is similar to personal property coverage found in a homeowner’s policy. Accessories insurance protects against damage or theft to the cab’s meter, dispatch communications system, and other related equipment. If you own a fleet of taxis, accessories insurance helps cover things you need to be operational.

Business Interruption Insurance

Business interruption coverage is also a smart option to protect against lost income in the event your taxi or limo is out of commission for a short period of time or your business is temporarily shut down for legitimate reasons. For example, if you own a cab and the vehicle is involved in an accident and off the road for several days to be repaired, business interruption coverage continues to pay your wages during that time. This type of insurance is akin to the loss of use of the property feature of your homeowner’s insurance.

Workers Compensation Insurance

For taxi and limo companies that employ drivers, it is a legal requirement in most, if not all, states to have worker’s compensation insurance for employees. Exemptions may exist for small business owners and independent contractors doing business as taxi or limo drivers, but it is important to consult with your insurance provider or legal counsel to verify if you are mandated by law to carry it.

Collision and Comprehensive Insurance

Collision insurance covers damage to your vehicles in the event of a collision. Comprehensive coverage protects against fire, theft, and other losses or damage to vehicles that are unrelated to a collision. 

Make sure you assess the taxi insurance cost in relation to the coverage. These types of add-on coverages cost around four-percent-to-five-percent of the value of the auto on an annual basis, but oftentimes insurance providers undervalue taxi and limo vehicles due to increased mileage on these cars.

What’s the difference between livery insurance and rideshare insurance?

People who drive for Uber, Lyft, or some other Transportation Network Company (TNC) usually are ordinary people looking to earn extra cash by using their personal vehicles to transport passengers. Therefore, many of the drivers working for TNCs don’t have a livery driver’s license and don’t register or insure their cars as commercial or livery vehicles.

Whether you drive a taxi or your own car for a ride-sharing company, one thing is for sure: personal insurance won’t cover damages that happen when you drive on the job.

According to the Insurance Information Institute (III), insurers and insurance regulators are concerned about misconceptions regarding the use of personal auto insurance policies by TNC drivers. Personal policies are made for private-passenger motorists who drive themselves, family, and friends without compensation, and average around 12,000 driving miles per year.

Commercial auto insurance policies, on the other hand, generally carry higher liability limits and are underwritten for vehicles that transport paying customers and travel more miles than private-passenger cars.

Ridesharing drivers cannot rely on their personal auto insurance for protection. In fact, most personal auto policies exclude coverage for livery-type services. The National Association of Insurance Commissioners wants ridesharing drivers to understand that there are three distinct periods where a personal auto policy offers no coverage:

  • Period 1: When the TNC driver logs into the TNC application but is not matched with a passenger;
  • Period 2: When the TNC driver has made and accepted a match with a prospective passenger but that passenger is not yet physically in the vehicle; and
  • Period 3: When the TNC driver has picked up the passenger and the passenger is occupying the TNC driver’s vehicle.

Clearly, those are periods of time when coverage is most needed. TNCs are commercial enterprises, and therefore, in order to have the right coverage, TNC drivers should obtain commercial insurance coverage similar to taxi and livery car drivers. If you drive for a ridesharing company, you should talk with an insurance agent about limo insurance for personal use vehicles.

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Get Help

If you’re driving a taxi or a limo, or your own car for a ridesharing company, you could be exposed to liability if you don’t have the proper vehicle insurance coverage. Don’t put off getting the right insurance for your taxi, limo, or ridesharing car. 

You can talk to an agent in your area now about getting affordable taxi insurance by putting your ZIP code into our search tool.

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