Motor Insurance

Insurance For Commercial Vehicles

Insurance For Commercial Vehicles

You might have invested in vehicles be it a cab, a mini-truck, or a school bus to generate income for yourself. These vehicles become important revenue-generating assets for you.

Like any other revenue-generating asset, you need to financially protect these vehicles to avoid business disruption due to any kind of accidental damage or liability due to damage of any third party person or property on the road.

What’s more, you are legally required to buy an insurance cover for your vehicle. If you don’t own one, you can face legal repercussions like fines, etc.

In this article, we’ll discuss what insurance for commercial vehicles is and how it works.
 

Let’s First Discuss What is A Commercial Vehicle?

A vehicle that is used for commercial purposes to transport either goods or passengers is called a commercial vehicle. It is a vehicle meant for business purposes and weighs 3.5 tonnes or more.

Examples: Cabs, taxis, trucks, lorries, auto-rickshaws, school buses, cranes, etc.
 

What is Insurance for Commercial Vehicles?

Insurance for commercial vehicles is similar to any standard vehicle insurance policy. The insurance policy promises financial coverage for any losses or damages caused to the vehicle due to accidents, fires, calamities, etc. Buying insurance for a commercial vehicle can help you manage any financial losses arising due to such incidents.
 

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Why Should You Buy Insurance for Commercial Vehicles?

Here are 3 important reasons behind buying insurance for commercial vehicles -

  • To Protect Yourself From Damage And Financial Liabilities

    A commercial vehicle is part of your business family. It is always on the road, sometimes even for 24 hours. Its frequency of travel is higher than private vehicles, which in turn, exposes it to a greater risk of damage. Any damage to a commercial vehicle puts the vehicle off-road, thus having an impact also on the business and its revenues. It is hence important to cover commercial vehicles with insurance, It financially covers your business against any losses due to major damage to your vehicle.

  • To Protect Your Business From Any Third-Party Liabilities.

    Commercial vehicles run for long hours and across different kinds of routes, areas, and cities. These vehicles are often driven by paid drivers who may cause injury to someone on the road, or ram the vehicle to an expensive property/asset. As per law, your business will be liable to pay damages for injury or damage based on liability awarded by the court of law. Such losses may severely affect your business and its profitability. Through third-party insurance, you are covered for unlimited liability on death/injuries and liability up to Rs. 7.5 lakhs in case of damage to property.

  • A Third-Party Insurance Cover is Legally Mandatory

    Besides the liability explained above, It is also compulsory under the law that every vehicle (be it commercial or private) on the road must have at least third-party insurance. If you don’t comply with these rules, you can face legal repercussions like fines, etc. that again be an unnecessary loss for your business.
     

Types of Plans for Commercial Vehicles

Commercial vehicles and the policies available can be of various types. Let’s see.

  • Insurance For Passenger Carrying Vehicles

    Passenger carrying vehicles are intended to carry one or more passengers and include cabs, taxis, private buses, school buses, auto-rickshaws, etc. It is important to get such vehicles insured because they have a huge responsibility towards the passengers and the coverage will safeguard them against any unfortunate circumstances.

  • Insurance For Goods Carrying Vehicles

    Goods carrying vehicles, as the name suggests, are used for the purpose of transporting various goods from one place to another. They include lorries, trucks, tempos, etc.

    Given their large size, they are prone to higher risks. Buying insurance for a goods carrying vehicle not only safeguards the third party from loss or damage but also protects the owner-driver and the vehicle from natural calamities and ill-fated situations.

    This insurance is a must-have for businesses that regularly use such vehicles to transport goods.

  • Insurance for Miscellaneous And Special Vehicles

    All vehicles that are used for commercial purposes, other than the ones listed above, are classified under miscellaneous and special vehicles. They include vehicles used for farming, construction, mining, etc.

    An insurance policy for such vehicles will -

  1. Provide financial coverage for losses caused by and to the vehicle.
  2. Protect the owner-driver against unfortunate circumstances.
     

What Situations are Covered By Insurance for Commercial Vehicles?

Insurance for commercial vehicles will protect the insured person against any damages or losses caused by -

  • Fire accidents like explosions, self-ignition, or lighting
  • Strikes and riots
  • Theft
  • Natural calamities like earthquakes, floods, storms, hurricanes, inundation cyclones, typhoons, hailstorms, landslides, rockslides, etc.
  • Accidents
  • Malicious acts
  • Terrorist activities
  • Road, rail, inland waterway, elevator, or air transit

Example : Kamal, the owner of an auto-rickshaw, has parked his auto-rickshaw in front of a factory. There was a huge strike by the factory workers and they damaged all the vehicles parked near the factory by breaking their handles, windows, wipers, windshields, etc. Kamal’s auto-rickshaw got damaged too. But, since he owns an insurance policy for his commercial vehicle, the repair cost of the same will be covered by it.
 

What Situations are not Covered by Insurance for Commercial Vehicle?

Insurance for commercial vehicles doesn’t cover loss or damage caused by

  • Depreciation
  • Wear and tear
  • Consequential losses
  • Failures or breakages
  • Mechanical or electrical breakdown
  • Damages to accessories by burglary
  • Damages caused due to overloading or strain of the commercial vehicle
  • Accidents or damages caused to the vehicle under the influence of alcohol or drugs
  • Any damages caused to the tyres or tubes unless the vehicle insured is damaged at the same time. In this case. the liability of the company shall be limited to 50% of the replacement cost.

Example : Rohit, a taxi driver, hit an electric pole when driving his taxi late at night. This caused significant damage to the bonnet, headlights, and windshield. He made a claim under his insurance plan, but it was discovered that he has been under the influence of alcohol when the incident happened. Hence, his claim was rejected and he received no compensation for the repair costs.
 

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Benefits of Insurance for Commercial Vehicles

Here is why owning insurance for commercial vehicles is beneficial -

  • It gives you protection against any financial losses caused by an unforeseen situation. For example, if your vehicle is covered under comprehensive insurance, and is completely damaged in the floods, you can make a claim under your insurance plan and be worry-free.
  • As mentioned earlier, it covers any damage caused to a third-party person or property. And since a third-party cover is mandated by law, you will be protected against any legal repercussions too.
     

Can You Buy Insurance for Commercial Vehicles Online?

Yes! You can purchase insurance for commercial vehicles online by following these simple steps -

  • Visit the website of your preferred insurance provider, broker, or web aggregator.
  • Select whether your vehicle is Goods Carrying Vehicle or a Passenger Carrying Vehicle.
  • Fill in vehicle details like the make, model, registration number, RTO details, etc.
  • After you submit the details, you will be directed to the quotation page. You can select your desired value for the vehicle and proceed to the payment page.
  • Then, make the payment to confirm your policy purchase. Make sure you crosscheck all the details entered by you.
  • Once you make the payment, you will receive the policy document. Confirm whether all your details are correct and that the policy explicitly states that it is for commercial vehicles.

Note: The application process online may vary from insurer to insurer.
 

Insurance Premiums for Commerical Vehicles

Here’s a table that demonstrates how insurance premiums vary across different commercial vehicle types -

Vehicle type The capacity of the vehicle TP premium rates
Passenger Carrying Four Wheelers (Up to 6 passengers) Up to 1000 CC ₹6,040
Above 1000 CC to 1500 CC ₹7,940
Above 1500 CC ₹10,523
Passengers carrying motorized two-wheelers Up to 350 CC ₹861
Above 350 CC ₹2,254
Goods carrying commercial vehicles (Except three-wheelers) Up to 7500 Kg ₹16,049
Above 7500 Kg to 12,000 Kg ₹27,186
Above 12,000 Kg to 20,000 Kg ₹35,313
Above 20,000 Kg to 40,000 Kg ₹43,950
Above 40,000 Kg ₹44,242


Conclusion

Insurance for commercial vehicles provides coverage against any damage or losses caused by an accident, natural disaster, etc. It helps you remain stress-free from the financial setbacks that arise from such unforeseen circumstances. If you run a business that uses a commercial vehicle, then you should consider buying an insurance policy right away.

 

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