A quarter of city taxicabs parked over insurance woes
An insurance cost spike has prompted drivers of more than 100 local taxis to give up their plates — and in some cases, leave the industry altogether
Nearly a quarter of all city taxis — more than 100 cabs — are off the road as drivers give up their plates over the sudden loss of affordable insurance coverage.
The city is warning the loss of so many cabs at once could affect the city’s transportation network and hurt residents who depend on accessible taxis to get around.
The problem began this month when a major taxi insurance provider did not renew coverage for hundreds of vehicles driving under the banner of Hamilton Cab and Blue Line Taxi, says a memo from licensing head Ken Leendertse to city council.
Both local brokers found temporary coverage for the next few months — but the resulting spike in costs has so far spurred drivers for 105 local taxicabs to “surrender” their plates and park their vehicles.
“It’s getting a little crazy,” said Hamilton Cab chair Jagtar Singh Chahal, who added the broker is still searching for permanent, “more affordable” insurance to replace temporary fleet coverage that expires in August. Blue Line Taxi’s temporary coverage expires in mid
March.
“Some operators are giving up their plates and just getting out of the business.”
There are 441 city-issued taxi plates in Hamilton, with 40 reserved for wheelchair-accessible vehicles. Some cab drivers own their plates, but many others lease plates from brokers or other owners.
The city’s licensing memo notes the permanent loss of so many cabs would cut $70,000 from annual licensing revenue — and also potentially hurt the “accessible community” that increasingly relies on cabs for wheelchair transportation.
So far, only two of the city’s 40 accessible cabs have been parked over insurance woes.
But any further loss of accessible cabs would cause “hardship” for residents, said Aznive Mallett, a quadriplegic wheelchair user who chairs the city’s advisory committee for persons with disabilities.
“I rely on them, for sure. It’s the only way I can get around the city on time,” said Mallett, who noted many wheelchair users have expressed concerns about the reliability of Hamilton’s oversubscribed DARTS shared-ride disabled transit system.
“If we lose too many of those (cabs) it would make life unbearable.”
The insurance spike is the result of local taxi companies having to suddenly switch to government-mandated “coverage of last resort” while they scramble to find replacement insurers, said Blue Line president Anthony Rizzuto. (That type of coverage is normally meant for high-risk drivers.)
For example, average insurance for one cab and two drivers used to cost anywhere from $5,000 to $9,000 a year. Now, local drivers face renewal rates from $12,000 to $23,000.
Taxis are considered a higher risk to insure because of the higher claim potential associated with the urban environments where cabs tend to operate — think busy downtowns — as well as the simple fact cabs can be on the road around the clock, said Pete Karageorgos of the Insurance Bureau of Canada.
In general, the auto insurance is also dealing with a spike in accident claims and payouts, he said.
Rizzuto said both brokers are searching for new private insurers, but noted more than 3,000 taxis across Toronto, London and Hamilton lost coverage from the same company at the same time. “It’s hopefully a temporary setback — but right now, it’s affecting us immensely,” he said.
This isn’t the first time local cab drivers have dealt with temporary insurance spikes. But the latest challenge comes atop a dramatic loss in value for taxi plates that owners once treated as saleable retirement assets — until ride-hailing companies like Uber upended the traditional cab monopoly.
Chahal said he fears the number of drivers parking their vehicles will grow unless both the city and province team up to provide “a more level playing field” for the taxi industry.
For example, each taxi in Hamilton is required by law to have $2 million in insurance coverage in order to hit the road.
Ride-hailing companies, by contrast, can extend temporary coverage to drivers picking up fares using ride-hailing apps.
In British Columbia, the government recently agreed to provide cheaper per-kilometre distance insurance to cab drivers to help deal with ongoing conflict between the taxi and ride-hailing industries. “Why not do that here?” Chahal asked.
For now, he said taxi industry representatives have appealed to the city for help — for example, a break on plate renewal fees that cost $661 a year. The city has agreed to at least delay those fees, so far.