# Insurance for a taxi or private hire firm: what you need

> A taxi business needs motor insurance that covers hire and reward work on every licensed car, employers' liability insurance of at least £5 million once it employs staff, and often public liability insurance as a licence condition. Your council checks the motor cover before it licenses a car. Bristol, for example, asks operators with a public waiting area for £5 million of public liability cover.

By Joe, founder of Dispatch AI. Updated 2026-10-11. The web page: https://dispatchai.co.uk/guides/taxi-business-insurance-uk/

Taxi business insurance is the one cost you can't skip or put off until later. This guide covers each policy a UK taxi or private hire firm needs, which ones the law demands, which ones your council adds as licence conditions, and the gaps that leave a car on the road without valid cover. The figures come from the Road Traffic Act 1988, gov.uk and named councils' own published policies.


## What insurance does a taxi business need?

Four kinds of cover come up for nearly every firm: hire and reward insurance on each licensed car, public liability insurance for the operator, employers' liability insurance once you employ anyone, and fleet insurance if the firm owns several cars. Only some of them are a legal duty everywhere.

| Cover | What it pays for | Required by | Who holds it |
|---|---|---|---|
| Hire and reward motor insurance | Injury and damage you cause while carrying paying passengers | Road Traffic Act 1988 s143, and your council before it licenses the car | The vehicle owner, driver or firm |
| Fleet insurance | The same motor cover for several cars on one policy | Not the law: a way of buying motor cover | Firms that own or lease their cars |
| Public liability insurance | Injury or damage to members of the public caused by your business | A licence condition in some councils | The operator |
| Employers' liability insurance | Injury or illness your employees suffer because of their work | Employers' Liability (Compulsory Insurance) Act 1969 | Any employer, with a few exceptions |

The sections that follow take each one in turn, with what the law and the council check.


## Is private hire insurance different from taxi insurance?

Yes. A hackney carriage can be hailed in the street and wait on a rank, while a private hire vehicle can only take pre-booked jobs. The two are licensed differently, so the policy has to match the licence the car holds.

Councils check this before they license a car. Section 48 of the Local Government (Miscellaneous Provisions) Act 1976 says a council must not grant a private hire vehicle licence unless it's satisfied that insurance meeting Part VI of the Road Traffic Act 1988 is in force for the use of the vehicle. Bristol City Council asks for a certificate of insurance "which covers the use of either private hire or hackney carriage" with every new vehicle application. Transport for London asks for hire and reward insurance documents when it licenses a private hire vehicle.

The wrong use is where drivers get caught. Bristol tells drivers of hackney carriages licensed by other councils that their insurance will be invalid if they break their licence conditions, for example by working mainly in Bristol or using its ranks.

A personal car policy won't do at all. The council won't license the car on it.


## What does the law say your motor policy must cover?

Section 143 of the Road Traffic Act 1988 makes it an offence to use a motor vehicle on a road or other public place without insurance that meets the Act, or to cause or permit someone else to. Section 145 then sets out what the policy has to cover: death or injury to other people, and damage to property, caused by the use of the vehicle.

The Act sets a floor, not a target:

- Injury cover has no ceiling in the Act.
- Property damage cover can be capped, but not below £1,200,000 for any one accident.
- The policy doesn't have to cover damage to your own car. That's the difference between third party cover, the legal minimum, and comprehensive cover.
- In most cases it doesn't have to cover your own employees hurt at work, because employers' liability insurance is there for that.

If your drivers own their cars, a gap in their cover is still your problem. Outside London, section 46 of the 1976 Act stops an operator sending a car on a job unless the vehicle and the driver hold current licences, and councils make insurance a condition of the vehicle licence. Bristol's vehicle conditions require private hire or hackney carriage cover to be in force at all times while the car is licensed, with proof shown on request to an authorised officer or the police.


## Do you need fleet insurance?

Only if the firm owns or leases the cars. Fleet insurance is motor insurance for several vehicles on one policy, usually with one renewal date. It isn't a separate legal requirement: each car still needs hire and reward cover that matches its licence and its drivers.

Where drivers own their cars and insure them themselves, your job is to check, not to buy. Bristol City Council makes operators keep a copy of the current insurance certificate or cover note for every private hire vehicle that works for them, alongside the driver's licence and badge, the vehicle licence and the MOT. TfL tells new London operators at the compliance inspection that insurance is one of the records they must keep.

A simple routine covers it:

1. Take a copy of each certificate before the car does its first job for you.
2. Note the expiry date and the named drivers.
3. Check again at every renewal, and when a new driver starts using the car.
4. Stop giving jobs to a car whose cover has lapsed, the same day.

Dispatch AI, booking and dispatch software for taxi and private hire firms, reminds you and the driver before a licence or insurance document runs out. Whatever you use, there's more on running the dates in our guide to [driver document reminders](https://dispatchai.co.uk/guides/driver-document-expiry-reminders/).


## Do private hire operators need public liability insurance?

Often, as a licence condition rather than a law. The Department for Transport's best practice guidance tells licensing authorities that "it is appropriate" to check that a private hire operator has appropriate public liability insurance. Each council then sets its own rule.

Bristol shows how specific that can get. Its Hackney Carriage and Private Hire Licensing Policy says that where an operator's licensed premises include a public waiting area, the operator must have public liability insurance of at least £5,000,000. An office with no public waiting area isn't caught by that clause.

Public liability covers claims from members of the public, such as a customer who trips over a cable in your waiting room. It doesn't replace motor cover for anything that happens with the car on the road. Read your own council's operator conditions, because the amount and the trigger vary, and in London ask TfL. Our guide to [getting a private hire operator licence](https://dispatchai.co.uk/guides/private-hire-operator-licence-uk/) covers the rest of the application.


## When do you need employers' liability insurance?

As soon as you employ someone. The Employers' Liability (Compulsory Insurance) Act 1969 requires every employer carrying on business in Great Britain to insure against liability for injury or disease that employees suffer at work in that business. Gov.uk sets out what that means in practice:

- cover of at least £5 million, from an insurer authorised by the Financial Conduct Authority;
- you can be fined £2,500 for every day you aren't properly insured;
- you could be fined £1,000 if you don't display the certificate where employees can see it, or don't show it to an inspector who asks;
- you don't need it if you only employ close family members, or someone based outside England, Scotland and Wales.

In a taxi firm the obvious employees are controllers, call handlers and office staff. Drivers are the harder question. The Transport Committee, using Department for Transport figures, reported that 89% of taxi and private hire drivers were self-employed in 2024. But the 1969 Act covers employees, and whether a driver is an employee, a worker or self-employed depends on how the work really runs, not on the label in the contract. Ask your broker to look at the real arrangement, and read our guide to [whether taxi drivers are self-employed](https://dispatchai.co.uk/guides/self-employed-or-employed-taxi-drivers/).


## How do you buy cover without gaps?

Give the insurer an honest, complete picture, then check the paperwork against your licences. Under section 3 of the Insurance Act 2015, a business must make "a fair presentation of the risk" to the insurer before the contract is entered into.

1. Say whether each car is licensed as a hackney carriage or a private hire vehicle, and by which council.
2. Give the real list of drivers who'll use each car.
3. Describe the work: pre-booked, rank work, airport runs, school contracts or account customers.
4. Disclose past claims and motoring convictions.
5. Check the insurer is authorised on the Financial Conduct Authority register.
6. Check the certificate names the right use, cars and drivers before the first job.
7. Keep every renewal date in one place, next to the licence renewal dates.

Insurance is one of the costs to price in before you start trading. Our guide to [the cost of starting a taxi business](https://dispatchai.co.uk/guides/cost-to-start-a-taxi-business-uk/) sets out the others, and the [starting a taxi firm guides](https://dispatchai.co.uk/guides/topics/start-a-taxi-company/) cover licences, vehicles and drivers in order.

## Frequently asked questions

### Can I use my own car insurance for private hire work?

No. The council won't license the car on a personal policy. Bristol asks for a certificate covering private hire or hackney carriage use, and TfL asks for hire and reward insurance documents before it licenses a private hire vehicle.

### Do I need employers' liability insurance if all my drivers are self-employed?

If nobody works for you as an employee, the 1969 Act doesn't require it. Office staff and controllers on the payroll are employees, though. A driver's status depends on how the work really runs, so ask your broker to look at the arrangement rather than the contract's label.

### What happens if a car does a job without valid insurance?

Using a vehicle, or permitting its use, without the insurance the Act requires is an offence under section 143 of the Road Traffic Act 1988. Councils also make insurance a condition of the vehicle licence, so it puts the plate at risk too.

### How much public liability cover does an operator need?

It depends on your council. Bristol sets a minimum of £5 million where the operator's premises include a public waiting area. Other councils set different amounts or none, so read your operator conditions, or ask TfL in London.

### Is there a legal minimum for motor cover?

Yes. Section 145 of the Road Traffic Act 1988 requires cover for injury to other people with no ceiling, and for property damage of at least £1,200,000 per accident. Damage to your own car isn't part of the legal minimum.


## Sources

- [Road Traffic Act 1988, section 143 (legislation.gov.uk)](https://www.legislation.gov.uk/ukpga/1988/52/section/143) users of motor vehicles to be insured
- [Road Traffic Act 1988, section 145 (legislation.gov.uk)](https://www.legislation.gov.uk/ukpga/1988/52/section/145) what a policy must cover, the £1,200,000 property figure and the exceptions
- [Local Government (Miscellaneous Provisions) Act 1976, section 48 (legislation.gov.uk)](https://www.legislation.gov.uk/ukpga/1976/57/section/48) insurance before a private hire vehicle licence
- [Local Government (Miscellaneous Provisions) Act 1976, section 46 (legislation.gov.uk)](https://www.legislation.gov.uk/ukpga/1976/57/section/46) operators may only use licensed vehicles and drivers
- [Employers' Liability (Compulsory Insurance) Act 1969, section 1 (legislation.gov.uk)](https://www.legislation.gov.uk/ukpga/1969/57/section/1) the duty to insure
- [Employers' liability insurance (GOV.UK)](https://www.gov.uk/employers-liability-insurance) £5 million minimum, fines, exemptions
- [Insurance Act 2015, section 3 (legislation.gov.uk)](https://www.legislation.gov.uk/ukpga/2015/4/section/3) the duty of fair presentation
- [Taxi and private hire vehicle licensing: best practice guidance (Department for Transport)](https://www.gov.uk/government/publications/taxi-and-private-hire-vehicle-licensing-best-practice-guidance/taxi-and-private-hire-vehicle-licensing-best-practice-guidance-for-licensing-authorities-in-england) section 7.4, operators' public liability insurance
- [Hackney Carriage and Private Hire Licensing Policy 2021 to 2026 (Bristol City Council)](https://www.bristol.gov.uk/files/536-hackney-carriage-and-private-hire-licensing-policy) £5,000,000 public liability with a public waiting area; operator records; vehicle insurance conditions
- [Apply for a new vehicle licence (Bristol City Council)](https://www.bristol.gov.uk/business/licences-and-permits/taxis-and-private-hire-licensing/apply-for-a-new-vehicle-licence) insurance certificate for private hire or hackney carriage use
- [Out of town taxis (Bristol City Council)](https://www.bristol.gov.uk/business/licences-and-permits/taxis-and-private-hire-licensing/out-of-town-taxis) insurance invalid outside licence conditions
- [Private hire vehicle licence (Transport for London)](https://tfl.gov.uk/info-for/taxis-and-private-hire/licensing/private-hire-vehicle-licence) hire and reward insurance documents
- [Private hire operator licence (Transport for London)](https://tfl.gov.uk/info-for/taxis-and-private-hire/licensing/private-hire-operator-licence) records checked at the compliance inspection
- [Raising the standard: licensing of taxis and private hire vehicles, HC 80 (House of Commons Transport Committee)](https://api.parliament.uk/committees/publications/53519) 89% of drivers self-employed in 2024

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