Every vehicle plying on the Indian road needs to be mandatorily insured. If you are running a business, Insurance required is needed for commercial vehicles also such as passenger-carrying vehicles, goods carrying vehicles, miscellaneous vehicles such as Cranes, Trailers and tractors. It is important to have comprehensive coverage for commercial vehicles as road mishaps can result in heavy liability and make your business suffer.
What is commercial vehicle insurance?
Commercial vehicle insurance is a type of motor insurance policy that provides coverage against liabilities arising out of third-parties when involved in an accident, loss or damage to the insured vehicle against various man-made and natural calamities along with personal accident coverage to the owner and paid driver. This coverage is also referred to as commercial car insurance and commercial truck insurance as insurance is most commonly associated with company cars and goods carrying trucks.
Why do you need commercial vehicle insurance?
Commercial vehicles are an important part of many businesses. If you are running a business and using vehicles for business purposes, it’s important to insure them adequately. Following are the main reasons why you need to insure your commercial vehicle:
- In case your commercial vehicle is involved in any road accidents and causes bodily injury or property damage to the third party, then you will have to bear the liability arising out of the accident. Commercial vehicle insurance will shield your business against such liabilities.
- If your commercial vehicle gets damaged in a road accident, commercial vehicle insurance can help you get the financial aid to get the vehicle repaired.
- The commercial vehicle insurance plan also safeguards the paid driver and his family in case of accidental death or disability.
Coverage offered under a commercial vehicle insurance policy
Coverage under commercial vehicle insurance can be customised as per requirement. Comprehensive commercial vehicle insurance offers the following coverages:
- Third-party liability cover: Under this, liabilities arising out of the third party involved in the accident for bodily injury, death or property damage caused by the insured vehicle are covered.
- Own damage cover: Under this, coverage is offered to the insured commercial vehicle against the following perils
- Man-made perils such as housebreaking, theft, strike, riot, burglary and terrorism
- Natural calamities such as fire, explosion, lightning, self-ignition, storm, flood, typhoon, hurricane, hailstorm, tempest, cyclone, rockslide and landslide
- Coverage is provided for damages caused while in transit by road, rail, inland waterways, air, lift or elevator
- Personal accident cover: During road accident, if the owner or paid driver dies or gets injured resulting in a disability, commercial vehicle insurance plan provides coverage for the loss. Accidental death and disability cover is an in-built feature for any comprehensive commercial vehicle insurance policy.
- Towing coverage: Many commercial vehicle insurance policies offer towing coverage as part of a comprehensive policy in order to provide support for disabled vehicles. Some policies may offer this as an add-on.
Exclusions in commercial vehicle insurance
Following are the exclusions under commercial vehicle insurance:
- War and nuclear risks
- Ionizing radiation
- Accidental damage or liability arising out of the non-geographical area for the vehicle
- A vehicle driven by someone other than the driver, as stated in the ‘Driver’s Clause’.
- Vehicles being used other than in accordance with the limitations as to use.
- Consequential loss
What the factors that influence commercial vehicle insurance premium?
Following are the main factors that influence commercial vehicle insurance policy’s premium:
- Insured declared value (IDV) of the vehicle
- Age of the vehicle
- Make and model of the vehicle
- Fuel type and capacity of the vehicle
- Place of registration
- Vehicle usage purpose
- Business liability limit required
Premium rates for commercial vehicle insurance (for third party liability cover)
| Description of Vehicle Class | Premium with effect from 16th June 2019 (INR) |
| Goods Carrying Vehicles Public Carriers (other than 3 wheelers) | |
| GVW not exceeding 7500 kgs | 15,746 |
| Exceeding 7500 kgs but not exceeding 12000 kgs | 26,935 |
| Exceeding 12000 kgs but not exceeding 20000 kgs | 33,418 |
| Exceeding 20000 kgs but not exceeding 40000 kgs | 43,037 |
| Exceeding 40000 kgs | 41,561 |
| Goods Carrying Vehicles Private Carriers (other than 3 wheelers) | |
| GVW not exceeding 7500 kgs | 8,438 |
| Exceeding 7500 kgs but not exceeding 12000 kgs | 17,204 |
| Exceeding 12000 kgs but not exceeding 20000 kgs | 10,876 |
| Exceeding 20000 kgs but not exceeding 40000 kgs | 17,476 |
| Exceeding 40000 kgs | 24,825 |
| Goods Carrying Motorized Three Wheelers and Motorized Pedal Cycles – Public Carriers | |
| Except for e-carts | 4,092 |
| e-carts | 2,859 |
| Goods Carrying Motorized Three Wheelers and Motorized Pedal Cycles – Private Carriers | |
| Except e-carts | 3,914 |
| e-carts | 3,204 |
| Trailers | |
| Agricultural Tractors up to 6 HP | 857 |
| Other vehicles including Miscellaneous & Special Type of Vehicles (Class-C), (For each trailer, for more please multiply by no. of trailers) | 2,341 |
How to find the best commercial vehicle insurance?
To find the best commercial vehicle insurance, you can compare various policies available online on various parameters. Compare the policies on the basis of the cashless facility, network garages, claim settlement ratio and no claim bonus and many more such features. On insurance technology firm’s website, you can compare these plans on side by side basis and buy a plan that is best suited for your business. Cost-benefit analysis in the process of comparing and buying can help you make an informed choice.
Documents required for buying commercial vehicle insurance
The policy can be bought online also. Following are the documents required:
- Vehicle registration number, chassis number and the engine number
- The manufacturing date of the vehicle
- Date and city of the vehicle purchase
- Registration book copy
- Name and contact details of the owner
Frequently Asked Questions (FAQs)
- What is no claim bonus?
No claim bonus is a reward from the insurance company for not making any claims during the policy period. No claim bonus benefit can range from 20% to 50% on the premium. The benefit can be accumulated over the years. - What is a consequential loss
Consequential losses are the damage or loss resulting as a consequence of certain actions of the insured or third party in an accident. For example, engine damage due to hydrostatic loss due to parking the vehicle in the water-logged area during monsoon. - Which are the most common add-ons offered under commercial vehicle insurance plans?
Depreciation waiver cover and windshield cover are the two main add-ons offered under the commercial vehicle insurance policy. - What is depreciation waiver cover?
Depreciation waiver cover gives protection in the event of an accident by compensating the full value of vehicle parts without factoring in depreciation. - What is the windshield cover?
If the windscreen glass breaks or gets damaged during an accident, windshield cover compensates for repair or replacement cost. This will not be treated as own damage cost and hence your no claim bonus will not be affected by this claim.
