When you’re out for a drive, have you ever considered how many commercial vehicles are being driven around you? While this question may be weird, we’re sure you haven’t given it much thought. In case you have, needless to say, we are extremely proud!
But why did we ask you that absurd question in the first place? Well, because there are millions of commercial vehicles in India; however, a majority of them are uninsured. While there are many factors at play, the primary reason behind this is a lack of awareness about commercial vehicle insurance.
Key Takeaways
- Commercial vehicle insurance is designed to offer financial protection against losses and damages caused to and by a commercial vehicle and its respective driver/owner.
- As per the Indian Motor Vehicles Act, it is compulsory for all businesses to purchase commercial vehicle insurance for their automobiles.
- Some examples of commercial vehicles include auto-rickshaws, taxis, trucks, vans, buses, tractors, and trailers, among others.
- There are two types of commercial vehicle insurance policies available in India, namely third-party liability insurance and comprehensive insurance.
- It is possible to buy commercial vehicle insurance online in India.
So, if you have just bought (or are planning to buy) a car for commercial purposes, or you’re here just out of curiosity, keep reading. We’re going to tell you all about commercial vehicle insurance policies in India. But before we get into the details, let’s understand how they work:
A commercial vehicle insurance policy is a customizable plan designed to provide financial coverage for losses and damages caused to or by a commercial vehicle and its driver (or owner). It can result from natural calamities, theft, road accidents, collisions, fire explosions, or other related situations.
Let’s say you are the owner of an auto-rickshaw, and you get involved in a car accident that damages your vehicle. The accident injures you. In this case, your insurance provider will cover all the incurred expenses. This will include your medical bills and the vehicle repair cost. Similarly, if a third-party individual also incurs certain expenses due to the accident, your insurer will provide financial compensation to the third party.
As per the Indian Motor Vehicles Act, it is a legal mandate for all business owners to invest in a commercial vehicle insurance policy for their automobiles. This applies to auto-rickshaws, cabs, tractors, school buses, pick-up vans, trailers, and transportation trucks.
This is because commercial vehicles are used for essential tasks, and any kind of damage to the vehicle (or its driver) can result in heavy monetary losses. Also, the fact that certain commercial vehicles (like trucks, vans, and tractors) used for transportation purposes are more prone to road accidents makes commercial vehicle insurance all the more crucial.
Now that you know the basics of commercial vehicle insurance let’s decode its different types.
Driving You to the Right Destination: Commercial Car Insurance Types
While we’ve discussed how commercial vehicle insurance works, it is also important to understand its different types as it will help you buy the right plan – especially if you plan on purchasing commercial vehicle insurance online.
So, here are the two main types of commercial car insurance plans available in India:
Comprehensive Commercial Vehicle Insurance
As the name implies, comprehensive commercial vehicle insurance offers 360-degree protection to vehicles owned by businesses. This includes loss or damage to the vehicle that may result from uncertainties like an accident, theft, robbery, fire explosion, or natural disasters like earthquakes and floods.
Similarly, if any of these situations result in damage to a third-party person’s property (including vehicles), then the insurance provider will be required to offer financial compensation to the individual.
Additionally, comprehensive commercial vehicle insurance will also cover the expenses for any bodily injuries of the car’s driver as well as any third-party individual involved in the incident. But if an incident leads to disability or death of a person (the policyholder or the third-party person), a compensation sum will be provided by the insurer; however, in case of death, the amount will be decided by the Motor Accidents Claim Tribunal.
Also, since comprehensive commercial car insurance provides wide coverage, the premiums for this policy are comparatively higher. But it largely depends on which plan you choose and the benefits it entails.
Third-Party Liability Commercial Vehicle Insurance
Even though a third-party liability insurance plan for commercial vehicles is not as comprehensive, it is a popular choice for several business owners in India. This is because even third-party liabilities can quickly turn into a financial burden, which can leave you in debt or lead to bankruptcy.
However, buying third-party liability commercial car insurance can prevent such challenging situations, as the policy provides financial coverage for damage or loss of any third-party vehicle and property. Additionally, the insurance plan covers bodily injuries sustained by a third-party individual.
Moreover, an insurance provider will also offer monetary compensation if an incident involving your commercial vehicle results in the demise or disability of a third-party person. But in these cases, the sum is decided by the Motor Accidents Claim Tribunal, which is the same as comprehensive insurance policies.
You should also know that the premiums for this policy are comparatively cheaper, and you can even buy third-party liability commercial vehicle insurance online from the comfort of your home or workplace.
Slow Down and Read Through the Benefits of Commercial Vehicle Insurance
Now that we’re through with discussing commercial vehicle insurance and its types at length, let’s look at some crucial benefits of buying the policy:
Say Goodbye to Unexpected Financial Woes
We’re sure you’ll agree that unexpected financial expenses are a significant stress factor, especially when you’re expanding (or just starting out) your business. Instead, they can become a nightmare rather quickly. However, investing in commercial vehicle insurance will ensure that you are covered against such expenses, whether the damage is a result of theft, accidents, or natural calamities. Plus, you can focus on what’s important.
Third-Party Liability Coverage
Whether you buy comprehensive commercial car insurance or third-party liability insurance, you will be financially protected against all third-party liabilities. This means that if your commercial vehicle is involved in an incident that causes damage/loss to a third-party individual, property, or vehicle, the insurer will bear all the costs incurred by the third party.
You Meet the Legal Requirement
As we’ve discussed several times, as per the Indian Motor Vehicles Act of 1988, buying commercial vehicle insurance is a legal mandate in India. So, by purchasing the insurance policy, not only do you meet the said legal requirement, but you also keep yourself financially protected. And, of course, you even get the much-needed peace of mind.
Easy Customizations
One of the greatest (yet uncommon) advantages of commercial vehicle insurance is that the plan can be easily customized. This means that you can enhance the coverage by opting for riders or add-ons, such as towing assistance, accessory cover, engine protection cover, breakdown assistance, zero depreciation cover, and personal accident rider. However, the more add-ons you choose, the higher the premium will be.
Hassle-Free Online Purchase and Renewal
Today, like most other things, you can also purchase commercial car insurance online, and all you need is a good internet connection and a smartphone or laptop. The best part? You can also renew commercial vehicle insurance online while you kick back and relax. Better yet, the process for online purchase and renewal is completely hassle-free, quick, and seamless.
While we have covered the primary advantages of commercial car insurance, you can also avail additional benefits, such as No Claim Bonus (NCB), cashless claim, paperless claim, 24 x 7 customer support, and more. Make sure you’re on the lookout for these when buying commercial vehicle insurance!
Did You Know?
As per a report released by the World Bank, India has the highest number of road accident casualties. Approximately 53 accidents occur every hour in our country, and 1 death every 4 minutes!
Buying Commercial Vehicle Insurance Online: Inclusions and Exclusions
If you plan on buying commercial vehicle insurance online (or even offline), it is vital to know the common inclusions and exclusions of the policy, as it will help you choose the right plan.
But like we said, commercial vehicle insurance is a customizable policy, which means that the coverage benefits vary from one plan to another. However, we have curated a list of the most popular inclusions & exclusions of commercial vehicle insurance, so let’s take a look:
| Inclusions | Exclusions |
| Loss or damage of the insured commercial vehicle if arising from road accidents, fires, explosions, theft, robbery, lightning, natural disasters, and malicious acts. Coverage for third-party liabilities, including penalty claims, property damage, vehicle damage, or physical injuries. | Wear and tear of the commercial vehicle due to prolonged usage is not covered under commercial vehicle insurance. Vehicle breakdown due to failure of mechanical or electrical parts, or both. |
| Bodily injuries suffered by the owner or driver of the commercial vehicle. | If you are found driving with an invalid license, your commercial vehicle insurance claim can be rejected. |
| Financial compensation if any mishap involving the insured car results in disability or death of an individual. | Any incidents that occur when the policy tenure is over. |
Coverage for financial expenses, including lawsuits. | A claim will not be approved if the driver of the commercial car is found driving under the influence of alcohol or drugs. |
An option to extend coverage by opting for add-on covers or riders. | Contractual liabilities and consequential loss. War and nuclear perils. |
Word to Remember
No Claim Bonus
No Claim Bonus is an add-on cover that you can select when purchasing commercial vehicle insurance. As per this rider, a pre-decided amount (or percentage share) is added to your sum insured if you don’t make any insurance claims throughout the year.
You’ve Reached Your Destination
Phew, that was a really long drive, but we think it’s now time to part ways. If you were paying attention, you probably know everything about commercial vehicle insurance. But remember, always be thorough with your research, especially if buying commercial vehicle insurance online. And it’s best to look for reliable and trustworthy insurance providers with a high Claim Settlement Ratio. That’s it for now, we’ll see you later!
FAQs
Yes, all business owners in India are legally required to insure their commercial vehicles, as stated in the Indian Motor Vehicles Act.
The key factors that affect the premium for commercial vehicle insurance include the vehicle’s IDV, vehicle model, engine type, city of registration, policy type, and add-on riders.
Although it primarily depends on the insurance provider, commercial car insurance policies typically have a tenure of one year.
Yes, you can easily buy commercial car insurance online, and the process is quite quick and hassle-free.
No, commercial vehicle insurance does not cover damages caused due to mechanical failure or electrical breakdown.
Also Read: Comprehensive Insurance Explained
