DANVERS — The owner of a Peabody cab company is questioning a bylaw that requires taxi companies to carry $1 million in insurance coverage for each cab to get a license — an amount he said is impossible to get.
North Shore Taxi owner Sean McKinnon said neither the state nor private insurers offer such a high amount of coverage for taxis, and, without the proof of insurance, his company cannot get a license in town.
“Basically, that’s the basis of the entire defense,” McKinnon said. “They passed a bylaw that makes it unilaterally impossible to receive a license to conduct a lawful business.”
North Shore Taxi is the same company whose ad in The Salem News triggered the selectmen’s discussion on Feb. 5 that led to last week’s police crackdown on taxi services operating without the proper licenses and permits.
Local cab companies have since complied with the bylaw and stopped picking up fares in town, consequently leaving people who depend on cabs without a ride. Taxis not licensed in town can pass through town and drop fares off, but they cannot pick up passengers.
Selectmen plan to discuss taxicab operations tomorrow.
Officials say the town’s taxicab bylaw, passed in 2009, was meant to streamline and update the town’s cab rules and regulations, to keep passengers safe, and to make sure that cabs are inspected and drivers have background checks.
The annual fee is not prohibitive. A license costs $100 for the business and one taxi and $50 for each additional vehicle. Since the sting, some cab companies have pulled applications to get a license.
But McKinnon says the required $1 million in coverage is the sticking point. A letter he received from Lighthouse Insurance Agency in South Boston states the “highest available limit” both from the state and private insurance carriers “is a split limit of $250,000 per person and $500,000 per accident.”
Len Alkins, senior manager, general accounts group, for Lighthouse Insurance Agency, said coverage of $1 million is “just not available.”
While the state’s commercial automobile insurance manual says “higher limits are available at the option of the insurer,” Alkins said high limits are cost-prohibitive, even at the $250,000/$500,000 level, the highest the state and private insurers will go.
McKinnon said each of his 12 taxis is covered for $100,000 per person and $300,000 per accident. He pays a premium of $10,000 for each taxi, or $120,000 for the fleet. McKinnon said he does carry $1 million coverage on three limousines at a cost of $14,000 for all three cars, or $4,600 a vehicle. The lower premiums and higher limits for limo and livery vehicles reflect the fact that the cars are unmarked and intended to simply bring people to the airport, McKinnon said.
McKinnon said his cabs do not pick up fares off the street in Danvers. In the past, he had inquired about getting a cab license, but it was his impression that as long as he did not pick up unscheduled fares, he could operate.
He estimates that his company has picked up at least 200 fares from the Danvers Police Department in the past couple of years, at least one person a week. When police first called his company to pick up at the station, he said he spoke with a dispatcher and was told his company did not have a license.
“At the time, they didn’t care,” McKinnon said. “They needed people picked up.”
Until last week, police had not conducted a compliance check on taxicabs since before McKinnon started his company in September 2010.
Selectmen Chairman Bill Clark said it’s likely that town counsel will take a look at the bylaw but maintains that taxi companies should have sought the proper permits all along.
“If they had a problem getting insurance,” he said, “they should have gone to (Town Clerk) Joe Collins.”
Selectmen meet tomorrow in Town Hall, 1 Sylvan St., at 7 p.m.
Staff writer Ethan Forman can be reached at 978-338-2673, by email at firstname.lastname@example.org or on Twitter at @DanverSalemNews.