We’ve seen a number of discussions recently on social media regarding TPO cover for hire and reward drivers. There seems to be a certain amount of confusion as to what the term actually means. This is understandable as insurance is a fairly complicated topic with a large amount of jargon.
One driver got in touch with us on Twitter to ask for clarification. We thought this conversation could prove helpful to other drivers. So please find below a Q & A on the subject. We’ve left the driver’s details anonymous but the answers are provided by our Sales Manager Daniel Severin.
Hi, could you send me a full explanation of third party h&r insurance pls. It sounds ridiculous, how can there be a h&r policy that doesn’t protect the paying passenger?
Aug 20 2016
Hi. Now there does seem to be some confusion over this question and we have tried to answer it a few times. However, trying to do so in 140 characters or less on Twitter is quite difficult; but I’ll try to keep it short.
When you buy insurance for your car (taxi or personal) you can buy; Third Party Only (TPO), Third Party Fire & Theft (TPFT) and Comprehensive (Comp) or sometimes more commonly known as Fully Comp.
You’ll see some other phrases as well like “laid-up cover” and “A,D, F &T” etc; but the most common 3 terms are TPO, TPFT and COMP.
Firstly the law stats any vehicle which is on the road i.e. has road tax MUST have TPO cover to meet the minimum legal requirement. Which is why we believe TFL and other licensing authorities are afraid of enforcing drivers to have more than TPO.
So what is TPO cover?
TPO covers any damages caused to a third parties, persons and/or property. To keep it short; this means it covers any damages a policyholder causes in his car to someone and/or their property. It does NOT cover any of their own damages.
So for example if; Mr Smith drivers his car into a tree (by accident) his insurance policy will cover any damages to passengers i.e. Third parties, the tree and any surrounding areas i.e. third party property. However it will not pay for any damages to him or his car; so Mr Smith is left car-less or with a damaged car. Now TPFT; this is exactly the same as TPO. However cover is extended to cover his car in the event it is stolen (theft) or catches fire. In theory this policy is to cover any damages to his car that; he did not cause or can blame someone for. i.e. Get them to pay the cost for.
Then lastly there is COMP; so this covers all that TPO and TPFT cover. However it also covers damages to his own vehicle which he accidently causes. So if Mr Smith hits the tree and has COMP insurance; the passengers get paid, the tree gets paid and so does Mr Smith to repair his vehicle.
I hope this helps explain it a bit better and you can hopefully feel more at ease. At least if other H & R drivers have TPO cover and hit you or someone: Your property is covered and so are the passengers. That said we are firm that believes all drivers should be encouraged to have COMP cover and as a result we are one of the only suppliers who do not sell anything but COMP to the trade.
We feel if you are buying COMP cover you are more committed to the industry and treat your job as profession. Not to go on; but the real concern around insurance is the lack of checks and the amount of fraud currently happening. Please if you have time check out our blog pages around this.
Thanks for the reply. So basically there is no such thing as hire and reward insurance?
Aug 20 2016
There is; but this is classed as a type of ‘Use’ not a ‘Cover.’ In the UK we have a lot of uses that a vehicle can be used and insured for. For example off the top of my head there are: Private Hire, Private & Public Hire, Hackney Carriage (London), Hackney Carriage, Agriculture, Courier, Carriage of goods, Carriage of Heavy goods, Motor trade, Social use only, Social use with commuting.
The list really does go on and on and on. So when you buy insurance you buy what level of cover you want i.e. Comp, TPFT or TPO and then the insurer will ask what you will be using the vehicle for. They will then endorse the policy so you get the right certificate. (and are charged appropriately.)
For example as a Black Cab driver in London you will get a small certificate which has a very special wording on it regarding to the 1934 London Cab Order. But a cab driver in Manchester; driving a LTI TX will get a certificate saying something totally different. Also there is nothing stopping a London Black Cab driver getting TPO or TPFT cover on his cab with Hackney use.
I know of several fleet owners who only have TPFT cover to keep their cost down. Hope this helps and any if you have more questions let us know.
Aug 20 2016
Will do, much appreciated. A couple of more quickies, hope you don’t mind. Re the fraud, are private hire drivers failing to disclose ‘type of use’ to their insurers, and if they fail to disclose this, are paying passengers covered if there’s an accident And, regarding TfL’s new PH insurance regs, is it a requirement now that a minicab has to have private hire stated for ‘type of use’ in the policy for the duration of the PH licence? Thanks
Aug 20 2016
So this is where it gets interesting; and to give you a full and proper answer it would take a while. Your first question depends on a few things; did they have private hire insurance in the first place to get their PCO then cancel it to take out a cheaper private policy and not tell TFL/PCO?
Or did they use a fraudulent insurance document from the outset to obtain their roundel? However in theory the way the system is set up; members of the public will always be protected to a certain degree as we have the Motor Insurance Bureau or MIB.
They handle payments to people who have had an incident with an uninsured driver. Payments/Payouts are limited and sometimes reduced based on what they would have received if the person had been correctly insured. But there is a government body which will try and compensate people following an incident/accident.
Also there is a term in insurance called ‘Last Known Insurer’ – so sometimes the MIB will force the last known insurance company of that vehicle to pay any claims. I will not bore you over DM how this works.
On the second question about TFL; the answer is YES. We had a meeting with them recently to explain how we think it is a good idea. But the checks need to improve and they need some new systems for fleet owners and operators. If you take a fleet owner be-it Black Cab or PH; he will have vehicles which he uses as back up cars or cars waiting to be rented out.
So to keep his overheads down he will inform his broker/insurer to remove hackney use or PH use; the vehicle will then either be laid up or used for personal use only. This is much more cost effective each week or month etc. Then once it goes out on hire they will let their broker know and then they start paying the higher price again.
Now if this operator has to pay the higher price all year, who is paying this? Not the operator! It will be passed on to you renters. It also applies to the operators who do school contracts; over the summer holidays they take the vehicles off the road. However TFL are adamant there is no exception to the new rule and they will enforce it.
Their compliance team confirmed that failure to comply risks a loss of licence and a criminal prosecution. We then asked how they intend to check/monitor whether a 100K+ vehicles have insurance in force all the time? We pointed out a lot of drivers buy weekly and monthly insurance. How will you cope checking them all every week or every month? – To which they had no reply other than to repeat that if caught people breaking this rule could face prosecution.
Again I could go on and on about this; but I hope this helps you understand it a bit better. Also as mentioned we’re hoping to be at the next UCG union meeting; so you and other members can ask any insurance industry related questions that you might have.
Ahhhh, thank you. BTW I rent a cab currently but am waiting on one to buy. As a UCG member I’ll be in touch re insurance.
Aug 20 2016
Always happy to help. We have been doing insurance now for over 25yrs. So we appreciate it does not always make sense at first glance. Even we scratch our heads at times and have to take another look.
When you get in touch with the team, remember to mention you are UCG as we offer members a free guaranteed hire vehicle policy with their London black cab insurance.
Aug 20 2016
Should you require any further information please do not hesitate to get in touch. We’re always willing to help. Follow us on Twitter @planinsurance