In the United Kingdom, it is a legal requirement to purchase Third Party car insurance as a bare minimum if you wish to drive on the nation’s roads. This law has been in place for decades and there is no way to get around it! As car insurance is notoriously expensive, especially for new drivers, motorists often choose Third Party insurance because it is generally the least expensive. The question is: Should private hire firms be content with Third Party insurance or is it prudent to have a better level of coverage?
What Is Third Party Insurance?
As we mentioned above, it is the cheapest form of car insurance and offers the least protection but it does allow you to drive on UK roads. If you are caught without any form of insurance, you will be forced to pay a stiff fine, points will be added to your license and your vehicle may even be seized. As the incident will go on your record, it is also likely your private hire license will be revoked and having it restored will be extremely difficult to say the least.
Third Party insurance ensures other parties involved in an accident will be compensated if you cause accident to their vehicle or property. Additionally, it covers liability for injury to other people including passengers in your vehicle. For example, if you drove into another vehicle, your policy would pay out their costs but crucially; it would not pay out YOUR costs.
If you are to blame for the accident, there is no protection afforded to you or your vehicle. You need to pay for repairs to your vehicle and any medical bills from injuries you sustain. Third Party insurance also does not pay out if your vehicle is stolen or damaged in a fire. You will however be compensated if the accident is not your fault.
Why Choose Third Party Insurance?
The main reason to purchase this form of insurance is because it’s cheap. If you wish to get private hire insurance and you’re a relatively new driver, Third Party may be affordable whereas Fully Comprehensive might not be. It is also a consideration if your vehicle is only worth a few hundred pounds; after all, it doesn’t make sense to pay more for your insurance annually than what your vehicle is actually worth!
As a private hire vehicle operator, it might make more sense to pay a little extra for Third Party Fire & Theft as it offers crucial protection in the event your vehicle is stolen or damaged in a fire.
What Are The Downsides Of Third Party Insurance?
At one time, Third Party insurance was very popular with new motorists because of its relatively low cost. When the other options involved paying thousands of pounds per annum, Third Party was the clear winner. However, this increased popularity has led insurers to significantly increase the overall cost and for some drivers, it may not even be the least expensive option!
As younger drivers are statistically more likely to be involved in an accident and thus make a claim, insurance companies hit younger drivers with high premiums regardless of the type of insurance. Therefore, it might be better for you to shop around and see if there is much of a difference between Third Party and Fully Comprehensive.
The other big downside to Third Party for private hire operators is the lack of coverage overall. Due to the nature of your business, you simply must have a greater level of insurance. The potential for accidents is far greater than if you were a normal motorist and if damage occurs to your vehicle, will you be able to afford the cost of repairs? If your vehicle is stolen or ruined by fire, do you have the money to pay for these damages and get it back on the road?
As a private hire operator, one of your main considerations should be getting back on the road as soon as possible. With Third Party insurance, this is extremely unlikely and since driving is your livelihood, it makes no sense NOT to pay for a better form of insurance. Additionally, you need to consider additional extras such as Breakdown Cover and Public Liability insurance. If you operate several vehicles, Third Party insurance should not be an option as the risk of accidents, injuries and damages multiplies.
Getting Cheaper Private Hire Insurance
Rather than simply opting for the seemingly inexpensive Third Party option, you need to shop around instead and look for the best deals. You may discover that Fully Comprehensive insurance isn’t much more expensive. Always look to compare quotes on independent comparison services and do this every time your private hire insurance policy is up for renewal. Under no circumstances should you accept the renewal quote offered by your provider; insurers have no concept of loyalty and don’t give better quotes just because you’ve been with them a long time.
What’s Your Car Group?
Did you know the ‘group’ your car belongs in has a significant impact on how much you pay for car insurance? There are approximately 50 car groups in total; vehicles in the highest group are the most expensive to insure whereas those in the lowest group are the cheapest. If you intend on operating a fleet of private hire vehicles, bear this in mind before you make the purchase. A slight alteration to the fleet could save you a small fortune in insurance.
Security
As a private hire operator, you must know how important security is so fitting alarms and immobilisers should be a major consideration. As well as protecting your vehicle from theft, you also keep the cost of insurance down since insurers know your automobile is less likely to be stolen. Ensure your private hire vehicles are stored in a secure location such as a locked garage when not in use as this also reduces the cost of insurance.
While Third Party insurance is available to those driving private hire vehicles, we would recommend purchasing Fully Comprehensive insurance and you should also consider extras like Public Liability insurance.