Commercial Vehicles are different from privately owned vehicles because they are explicitly used for carrying out the business’s operations. A company’s assets are susceptible to many unexpected liabilities in the form of accidents or external threats. Damage to these properties could hamper the business’s operations and could also impact revenue. Here’s where insurance comes in. By getting insurance for assets like commercial vehicles, businesses can cover their liabilities arising from damages to the asset.
Key Takeaways
- Getting commercial vehicle insurance is mandatory for businesses that own vehicles for commercial purposes.
- Commercial auto insurance covers accidental damage, damage due to natural calamities and other unexpected risks that commercial vehicles are exposed to
- Car insurance for commercial vehicles like cabs are also covered under commercial vehicle insurance
- You can opt for commercial car insurance online by following a simple, hassle-free process
Learn the Basics
What is commercial vehicle insurance?
A commercial vehicle insurance is a motor insurance policy that covers the commercial vehicle and its owner/driver against any loss or damage that occurs in the unfortunate event of an accident, fire, collision, or due to natural calamities. If the vehicle owner has taken commercial vehicle insurance, the expenses arising from these unexpected events can be compensated through the insurance. By paying a small premium every month, commercial vehicle insurance can protect the vehicle owners against significant, unforeseen liabilities.
Who needs commercial vehicle insurance?
Heavy Commercial Vehicle Owners
Those involved in the businesses where owning commercial vehicles is required, like trucks, trailers, and lorries, need to buy commercial vehicle insurance. Such a policy minimises the loss of the businessman in case of any sort of loss or theft of the vehicle or its parts. It also covers damage to the vehicle, the vehicle driver or any third party involved. For example, in case of a road accident involving a commercial vehicle, the vehicle driver, the vehicle itself, and the person the commercial vehicle crashed into could incur damages that the vehicle owner might have to compensate for. All of these expenses can be covered by commercial vehicle insurance.
Light Commercial Vehicle Owners
Those involved in the business of owning and using commercial vehicles like cabs, autos, private school buses, commercial vans, etc., need to buy commercial vehicle insurance or commercial car insurance. Their policy also needs to cover the risk of damages to the passengers and other people that are involved with the vehicles in any way.
It is mandatory for people in the logistics business involving transportation such as trucks, school buses, commercial vans, tractors, auto-rickshaw, cabs etc., to buy commercial vehicle insurance.
In India, the Motor Vehicles Act, 1988 was introduced considering the number of accidents caused and losses incurred by the people and vehicles. According to this act, all vehicles operating in public spaces should have a motor vehicle insurance cover. While opting for the basic insurance plan, the policyholder must have at least the “third party liability” insurance cover included.
Before buying an insurance policy for your commercial vehicle, here are some important points that will help you choose the right policy to fit your needs.
5 Things To Know Before You Buy Commercial Vehicle Insurance In India
Get the correct type of coverage.
You need to consider a lot of factors before buying commercial vehicle insurance. The purpose is to get the maximum coverage for the vehicle and the vehicle driver. Sometimes buying insurance that only covers the damage to a vehicle and third party insurance is not enough. If the vehicle had a fault because of which an accident was caused, injuring the vehicle driver, the vehicle owners will be liable to compensate the driver for the damages.
Get the correct type of insurance
It is very important to understand what types of incidents the insurance policy covers. Generally, insurance reimburses for damages resulting from theft, accidents, fires, explosions, natural calamities, terrorist activities, riots and even specific problems like self-ignition issues.
Other add-ons that can be opted for include third-party damage, accidental death of the driver (for which the compensation will be paid to their family) and towing charges.
Based on the business owner’s requirements and the risks that the commercial vehicle is exposed to, the premium is calculated. The premium also varies for different models of vehicles. For instance, to get a truck insured, a high premium will be charged than a passenger vehicle like a car owing to the heaviness of the vehicle.
The purpose and usage of the vehicle, its ownership history, and the vehicle’s location also affect the premium.
Policy exclusions
Before buying commercial vehicle insurance, one needs to understand that some things might not be covered and hence cannot be claimed. Some of them are as mentioned below:
- Accidents occurred when the driver of the commercial vehicle was under the influence of drugs or alcohol
- Loss caused due to war
- Accidental damage caused when the commercial vehicle was conducting illegal activities
- Accidents caused due to the negligence of an unregistered driver (without driving license)
- Consequential damages like loss of earning and loss of customers are not covered.
- If the owner has only taken third-party policy cover, they can only claim the insurance if the third-party causes accidents.
Determining the price of the policy
The overall commercial vehicle insurance cost is calculated based on some important details which have to be submitted to the insurance providers. They then determine the best price and the maximum cover that they can offer. Some of the details needed to determine the cost include
- The age of the vehicle
- The type of vehicle
- The make and model of the vehicle
- The fuel the vehicle uses
- The registered domicile – which is the place where the vehicle will operate in
- Insured Declared Value – the value of the vehicle that owners declare to the insurance provider.
Apart from these details, insurance providers may also ask for the previous policy document if there was any policy taken previously. They track the history of previous premiums to determine whether the premium was paid on time or not and accordingly charge a higher premium if some premium payments were delayed.
Make use of technology
It is advisable to install cameras, anti-theft systems, and automatic accident detection devices in your commercial vehicle. There are two benefits to putting this technology into use:
- They serve as proof while filing for claims and remove any ambiguity involved. You have the chance of getting the maximum compensation when you submit strong proof.
- Your vehicle will fall under a low-risk category if you equip it with such devices. Consequently, you will have to pay a lesser premium.
Word to Remember
Compulsory Deductibles – A part of the insurance claim that you will have to pay. It is a method used by insurance providers to avoid fraudulent claims
Before purchasing a commercial vehicle policy it is advised to thoroughly research the policies available and analyze all the documents related to the policy properly. You should not opt for it only because it comes with a low premium rate. you should consider your requirements while purchasing a commercial vehicle policy. It is advised to look for maximum coverage so that when an unexpected liability strikes, you can be financially protected.
Frequently Asked Questions (FAQs)
Apart from being mandatory, you also get covered for all the damages incurred to the vehicle in case of accidents, fires or other threats
The premium value depends on the make and model, the age and other factors of the vehicle. The premium to get commercial vehicle insurance for heavy vehicles is more than that for passenger vehicles.
A commercial vehicle is usually insured up to its IDV(Insured Declared Value), which is the vehicle’s ex-showroom price minus depreciation. In case of theft or if the damage exceeds the current value of the vehicle (after deducting depreciation), the insurance company will provide the IDV to the insured.
Yes, the premium of commercial vehicle insurance can be deducted from income for computing taxes as a business expense.
The premium of the commercial vehicle insurance policy is usually determined by the place of registration of the vehicle.
Usually, the vehicle owner first has to pay for repairs and then the insurance company reimburses the vehicle owner upon submission of documents and bills. However, some insurance companies in India have tie-ups with authorized garages across the country. Such tie-ups help policyholders avail benefits in case of emergencies. The insurance company coordinates and directly pays the garage on behalf of the vehicle owner without the vehicle owner first paying for repairs.
With the advancement of technology, insurance companies provide commercial vehicle insurance online as well. You can choose the add-ons you want to take, and upload the vehicle documents and photos. Post a verification, your seamless insurance process is completed.
You can head over to any insurance provider’s website and easily get insurance for your commercial vehicle. All you need to do is fill in your details and submit the requisite documents and a policy will be issued to you.