“Offering different rates for different classes. i.e taxi, private hire, chauffeur?”
February 25, 2015
Falling within the top level category of “Hire and Reward Insurance”, there are several different classes of Hire and Reward which can have a significant impact on the rates that you’ll pay for your insurance.
There are several other mitigating rating factors – postcode, driving experience, and no claims bonus for example – but the rates will change dependent on the class of Hire and Reward you fall into.
There are 3 main classes of Hire and Reward – Private Hire, Public Hire and Chauffeur.
Public Hire – often referred to as “taxi” or “black cab” – is the only one out of the three classes whereby the vehicle doesn’t have to be pre-booked and can be hailed from the street or a designated taxi rank. You can also pre-book. However, much of a Public Hire drivers business will be customers at taxi ranks or passing trade.
Private Hire vehicles – sometimes called “minicabs” – must to be booked in advance. There is usually a radio operator and a Private Hire vehicle will go from fare to fare, all prearranged in time slots.
The final class – chauffeur or “executive drivers” –is a subset of private hire. The chauffeur will be pre-booked to perform one journey (e.g. airport collection) or often a series of journeys (e.g. meetings) in one day for a client. It is likely that over 80% of a chauffeurs business will be long term contracts.
So let’s investigate why each of these three classes might affect the insurance rating criteria.
Specific criteria for Chauffeur Insurance
Vehicle – Chauffeurs are a sub-set of private hire however generally a higher value luxury vehicle such as a Mercedes, BMW and Jaguars. The vehicle tends to be a lot newer and often with top of the range specifications – hence the vehicle value (and payout) is much higher in the event of a fault claim.
A more expensive car doesn’t necessarily mean lower premiums though. Modern cars have much better safety features than older vehicles – lane assist and front/rear camera for example – as well as improved theft security features. New cars are often driven more carefully too.
Vehicle value is a rating factor but it is not as clear cut as higher premiums for most expensive cars.
Driving Style and Annual Mileage
Chauffeurs are likely to do a lot less miles per annum than Private/Public Hire and also they tend to drive more carefully. Chauffeurs can charge clients more for a much more personal service so number of clients/miles per day is not such an issue.
Private & Public Hire are reliant on numbers of fares and often work long hours – this potentially makes them a higher risk for a fault claim. These drivers are also often in cities/towns where the chance of an accident is higher than motorways.
Bookings and Time of Driving
Chauffeurs will often be transporting business people and this is more likely to be in daylight hours rather than nighttime where visibility is lower.
Contract work is generally perceived as less risk to insurance underwriters so any private hire, public hire or chauffeur that has a large amount of their business via contract work may be subject to softer rates.
If at least 90% of your work is contract then a specialist chauffeur insurance policy is required. This is particularly true for executive drivers that do airport transfers and have business contracts.
Payment (and cash in vehicle) – Unlike taking a taxi, chauffeur services are normally paid for well in advance or charged to account if they are a repeat clients. For this reason, chauffeur insurance policies only provide cover for 10% of the cash for a job and drivers would not be insured to carry more than this.
Passengers – If you are regularly transporting highly paid Business Executives or Celebrities, you must declare this to your insurer as the premium needs to take into account any serious injury/death payout.
Similarly, many private hire/public hire drivers don’t worry about additional public liability insurance for accidents that occur outside of the vehicle (e.g. tripping over baggage) but Chauffeurs normally take this cover.
When shopping the market for any type of hire and reward insurance, it is essential that you are as open and honest as possible with your insurance provider or broker about the nature of your work as any discrepancies could invalidate your cover.
Alongside private and public hire taxi insurance, Insure Taxi also offer competitive cover for limousine and executive car drivers. For more information call 0333 2000 094 or visit www.insuretaxi.com/chauffeur-insurance.