Commercial Vehicle Insurance: What You Need to Know?

When running a business, you often need a vehicle for work purposes, such as making deliveries, transporting equipment, or meeting suppliers or customers. However, you and your employees who drive this vehicle are susceptible to road mishaps or accidents, which may result in damages and liability worth thousands of rupees.Fortunately, you can protect your business against such liabilities and their related losses with Commercial Vehicle Insurance. Further, the Motor Vehicles Act of 1988 mandates every vehicle running on Indian roads to have Automobile Insurance Let's dive in and uncover what Commercial Motor Vehicle Insurance is, its types, inclusions, how to choose the right coverage, and more.

A Commercial Vehicle Insurance policy provides financial coverage for any damage and loss to vehicles used for commercial purposes. This insurance plan covers the vehicle's owner and driver against liability caused by accidents, crashes, theft, fire, man-made or natural disasters, and more.

Commercial Vehicle Insurance policy covers many public and private vehicles used for work purposes, including school buses, taxis, trucks, auto-rickshaws, trailers, mobile rig vehicles, grabs, etc.

There are three classifications of Commercial Vehicle Insurance in India. They are as follows:

Passenger Carrying Vehicle Insurance:

This type of insurance caters to vehicles that transport passengers from one place to another, such as buses, taxis, rickshaws, and so on. It provides financial cover to the passengers, owner/driver of the vehicle, and the vehicle itself from unforeseen damages or losses.

Goods Carrying Vehicle Insurance:

Large trucks and similar vehicles transporting goods are vital to some companies. However, their sheer size and bulkiness make them prone to roadside accidents and other mishaps. Goods Carrying Vehicle Insurance addresses such concerns by providing cover for the driver and vehicle from man-made disasters and damages caused by natural causes such as fire, floods and earthquakes.

Miscellaneous/Special Vehicle Insurance:

Some vehicles may not be used to carry people or goods but are required for construction, mining, farming, or other general purposes. These plans provide financial protection for vehicles used for such purposes, along with the driver/owner of the vehicle. Also Read: Everything You Wanted to Know About Motor Insurance

Business owners in India can purchase two kinds of Commercial Vehicle Insurance policies. These plans are known as Third Party insurance and Comprehensive Insurance. Let's read further to know Third Party Insurance and Comprehensive insurance in detail:

Third-Party Insurance

Third-Party Insurance is needed for all commercial vehicles, including school buses, taxis, trucks, auto-rickshaws, and other vehicles used for commercial purposes. Such an insurance policy will protect your business from various third-party liability claims.According to the Motor Vehicles Act, having Third Party Vehicle Insurance is a statutory requirement for every commercial vehicle owner in India. For instance, if your truck accidentally collides with another vehicle, you may have to cover the damages and losses incurred by the other motorist. You can avoid this liability by purchasing Third Party Commercial Vehicle Insurance.

Comprehensive Vehicle Insurance

Comprehensive Commercial Vehicle Insurance combines own-damage and Third-Party Vehicle Insurance. Therefore, along with providing third-party cover, this kind of plan will also cover damage and losses to your vehicle in an accident.Along with accidents, this plan will protect you from the financial impact of natural calamities, fires, and theft. However, since it is the most superior protection for commercial vehicles, the premium for such policies can be higher. To read more about the difference between Comprehensive and Third-Party Insurance, click here.

To get the most out of your policy, you must first understand what Commercial Vehicle Insurance covers. Therefore, reading the policy document's inclusion list before purchasing is essential. Further, if you need more protection for your vehicle, you can include several add-ons to enjoy Commercial Vehicle Insurance coverage tailored to your needs.

Cover against own damage

A Commercial Vehicle Insurance policy covers damage and loss sustained by your commercial vehicle due to strikes, theft, riots, terrorism, natural calamities (blasts, landslides, lightning, cyclones, floods, etc.), and man-made disasters.

Cover against third-party liability

Suppose any damage is caused to the third-party vehicle, driver, or someone's property in an accident involving yours and the third party's vehicle. In that case, Commercial Vehicle Insurance will provide liability coverage.

Covers against personal accidents

If an accident leads to a commercial vehicle owner's or driver's death or they succumb to injuries or become disabled, a Commercial Vehicle Insurance plan will cover them. A Comprehensive Commercial Vehicle Insurance policy often provides this type of protection.

Towing coverage

Many Comprehensive Commercial Vehicle Insurance policies support disabled vehicles by covering towing. Additionally, some plans provide this feature as an add-on policy. Also Read: Motor Insurance Third-Party and Own-Damage Exclusions: Reading Between The Lines

• Vehicles used for personal travel or other personal purposes.
• Mechanical and electrical breakdown.
• Regular wear and tear of the vehicle.
• Damages caused to the vehicle due to radiation, nuclear reaction or war. Damages sustained to a vehicle that has been pushed beyond its limit.
• Damages caused to the insured vehicle by a driver who is not mentioned in the policy.

Every business is unique. Therefore, a Commercial Vehicle Insurance policy that suits one business may not suit another. Keeping this in mind, here are some essential tips to help you find the right insurance for your business and commercial vehicle:

Compare the insurance policies:

Comparing at least 4-5 policies is vital to finding the Commercial Vehicle Insurance policy fitting your unique needs. You can visit the official websites of multiple insurance companies to compare policies based on add-ons, inclusions, exclusions, coverage, features, terms, etc. In addition, consider calculating Commercial Vehicle Insurance premiums using online calculators and comparing them.

Look for the right coverage:

Coverage is another crucial consideration in selecting the right Commercial Vehicle Insurance policy. You must know different types of policies offering coverage for commercial vehicles and the sum covered. For instance, look for comprehensive insurance if you want financial coverage for your own and third-party damages.

Check insured declared value (IDV):

The insured declared value (IDV) is the vehicle's current market value that the owner can receive during vehicle loss. Considering IDV before investing in a Commercial Vehicle Insurance policy is vital since it determines the insurance premium amount. Remember that the insurance premium increases with the value of IDV.

Carefully read policy terms and conditions:

Not reading all terms and conditions before buying a Commercial Vehicle Insurance policy can lead to a rejected claim. Moreover, knowing all terms and conditions will help you choose the right policy and make the most out of it. Also Read: Looking for Tractor Insurance Online?

• It is a must to purchase a Commercial Vehicle Insurance policy in India.
• You can have two types of Commercial Vehicle Insurance policies- Comprehensive and Third-Party Insurance plans.
• Regarding Comprehensive and Third-Party Insurance, the former covers own and third-party vehicle damages, and the latter covers only third-party vehicle damages.
• Note down all inclusions to know the extent of coverage you have.
• Consider multiple factors, like comparing the policies, looking for the right coverage, checking IDV, reading terms and conditions, etc., to choose the right Commercial Vehicle Insurance policy.