Whether your limo, taxi or livery business has a fleet or just one vehicle, you need to protect your income, assets and operators. The best way to do that is through a risk management program, complete with comprehensive insurance and thoughtful safety practices.
The difference in vehicles
As you explore insurance options, you’ll find a range of policies depending on the type of transportation you provide: taxi insurance, for-hire livery insurance, limousine or black car insurance. Rules and coverage vary, so look to your agent to help you navigate your niche. Whether you use taxis, limos, luxury sedans, SUVs or other vehicles, you’ll need some type of specialized commercial auto insurance.
And keep this in mind: Even if the city or state where you’ll be driving allows you to register and use your personal vehicle for a transportation business, you’ll still need commercial auto insurance. You personal auto policy won’t cover incidents that happen when you are using your vehicle for paid transportation.
Basic coverages all for-hire driving companies need
- Auto liability — This covers the repair or replacement of vehicles owned by others. It also covers their medical expenses, if you are found at fault for an accident or another driving incident. It also covers your legal expenses if you are sued. Depending on the policy, you may also be insured for the funeral expenses or lost wages of anyone injured or disabled as a result of the accident.
- Comprehensive insurance — Sometimes called noncollision coverage, this type of policy protects your vehicle if it’s stolen or damaged by weather or vandalism.
- Collision insurance — This type of policy covers the cost to repair or replace your taxi, limo or other for-hire vehicle if it’s damaged and it’s your fault. If the damage to your vehicle is someone else’s fault, they will be responsible for the repairs.
- Uninsured or underinsured motorist — Most states require this insurance for for-hire drivers. It protects you and your passengers should another person cause an accident but not carry sufficient insurance. The extended protection for passengers is especially important. Imagine another driver causes an accident but their insurance won't cover the resulting expenses. In that case, you'd become responsible for your passengers’ injuries and losses, even though the accident wasn't your fault.
- Personal injury protection — Unlike liability insurance, this type of policy kicks in regardless of whether you are found at fault for an injury or loss. It covers medical expenses and lost wages for you and your passengers.
Insurance requirements
Commercial auto and livery insurance requirements differ between companies, but here are some industry norms:
- Nearly every insurance company requires drivers to be at least 25 years old, and some will not accept drivers over 65.
- Most policies have a geographic range. If you operate beyond this defined area, the insurance will no longer apply.
- Some companies will not insure for-hire vehicles older than a certain year.
- If a driver has been convicted of driving under the influence, vehicular manslaughter, or possession of illegal drugs or weapons, they will likely be denied coverage under your policy.
Additional coverages to consider
Talk to your agent or broker about how your for-hire vehicles are used, the types of routes you drive, and your most frequent types of passengers or events. Depending on these details, you might want to purchase additional coverage. Options include:
- General liability insurance — If visitors come to your office, you need general liability insurance in case they are injured on your premises. This type of policy also covers libel, slander and advertising injury. It often comes as part of an overall insurance package.
- Excess liability — This will extend your protection when a loss is larger than your commercial auto liability policy limit.
- Business interruption insurance — If you can't operate your business due to a covered event, such as a storm or an act of vandalism, this type of policy will provide revenue until you’re back on the road.
- Sexual misconduct liability — Many general liability policies do not cover allegations of sexual misconduct. You may want to consider adding this coverage, particularly if you operate in a tourist area or regularly book bachelorette parties or similar events.
- Assault and battery liability — For-hire drivers are frequently used when passengers anticipate or have already had too much to drink. Although liquor doesn’t have to be involved for accusations of assault and battery to be made against you or your drivers, it certainly increases the chances.
- Cyber liability — If your livery company digitally transmits or stores personal or financial information online, this policy will pay for any losses resulting from a data breach. Covered losses may include recovery, investigation, victim restitution and even post-incident repair of your reputation.
- Fleet insurance — In many instances, fleet insurance is a better option for commercial cab, limo and livery companies. It can easily be written to cover multiple types of vehicles. It can be adapted to seasonal spikes and drops in business. And it covers vehicles on the road, in storage or under lease.
- Commercial property insurance — Your offices need property insurance so your building, its contents and any equipment stored there are covered in case of a fire or other damage. If you rent your workspace, ask your agent or broker to review your lease to see what insurance you must carry.
For owners who employ other drivers:
- Employment practices liability — If you are accused of discrimination, sexual harassment, wrongful termination or other questionable employment practices, this type of insurance will pay for your defense.
- Workers’ compensation — Each state has its own requirements related to workers’ comp, which helps your employees financially should they become sick or injured due to their job.
- Employee theft bonds — You have little oversight over your drivers when they’re on the road and handling passenger or company money, items or intellectual property. A bond offers valuable protection for you as the company owner should one of your employees steal from you.
Your assets, including your vehicles, drivers and offices, require liability and property insurance. A good insurance program tailored to your size, budget and operations can keep you in business even if a disaster strikes.