Commercial Vehicle Insurance

Commercial Vehicle Insurance

Commercial Vehicle Insurance is a type of motor insurance policy that provides coverage in case of damages or losses caused by or to a commercial vehicle and its owner-driver. It is a customized motor insurance policy that can include losses and damages in the situation of an accident, natural calamities, collisions, fire, etc. All businesses must purchase a commercial vehicle insurance policy for their motor vehicles like pick-up vans, cabs, auto-rickshaws, tractors, school buses, trucks, commercial vans, etc.

Commercial vehicles are an important mode of transportation and are heavy-duty vehicles, which are used on an everyday basis to carry out tasks. These vehicles usually include trucks, vans, trailers, buses, taxies, coaches, carriers, shovels, tractors, cranes, mobile rigs, bulldozers, etc. that are used to transport goods within the city/cities and from one state-to-another. They are also used for inter-city passenger tours and travel.

These heavy-duty commercial vehicles have an important contribution to bulk transportation for many businesses. However, such heavy-duty commercial vehicles are always prone to road accidents, unpredicted damages while driving and natural calamities.

Therefore, commercial vehicle insurance is important to covet these sets of wheels against the odds. Tractor insurance, insurance for covering goods carrying trucks, commercial insurance for pick-up vans etc.

Why is Commercial Vehicle Insurance Important?

Commercial vehicle insurance is beneficial for the smooth functioning of your running business against any adverse situations that may cause a huge financial drain. Almost every type of vehicle that is used for commercial purposes such as passengers carrying vehicles, private/public travel trailers, taxis, tractors, cranes, mobile rigs, bulldozers, etc. gets covered under comprehensive commercial vehicle insurance.

Buying commercial vehicle insurance online is a quick, easy and hassle-free process. Therefore, before you zero down the policy, compare commercial vehicle insurance quotes and purchase a policy that fits your budget.

Remember, any mishap while riding a commercial vehicle without valid commercial vehicle insurance can lead to a huge monetary loss and put anyone in a difficult situation.

Key Features of Commercial Vehicle Insurance

Commercial vehicle insurance plans come loaded with some salient features. The following are the salient features offered under commercial vehicle insurance:

  • Comprehensive coverage is provided to both public and private carriers including special types of goods carrying vehicles.
  • The commercial vehicle insurance plan provides cover for the liabilities in case of any injury or an accident.
  • Do not worry about the unwanted expense as having a commercial vehicle insurance plan will provide monetary compensation.
  • Remain stress-free from monetary setbacks incurred due to liabilities.
  • Third-party person/vehicle/ property damage cover.
  • A personal accident cover for the driver and the owner.
  • Protect your most valuable assets.
  • Cover driver, helper and conductor with your vehicle’s insurance.
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Types of Commercial Vehicle Insurance

Commercial vehicle insurance is generally of two types listed below:

  • Comprehensive Commercial Vehicle Insurance Comprehensive insurance offers complete protection to your commercial vehicle under any adverse circumstances, which may lead to an unwanted expense. Secure your commercial vehicle from uncertainties such as damage, fire, theft, robbery, flood, earthquake and so on. Besides, comprehensive vehicle insurance policy provides cover to third-party property or person in case of loss/damage.
  • Third-party Liability Commercial Vehicle Insurance Commercial vehicle insurance third-party liability offers protection to any third-party property, any third person or the vehicle, which may lead to the demise, bodily injury or any other damage. The safety of these types of commercial vehicles should be of utmost concern. Besides, the scope of coverage is more or less the same for both the insurance policies.

Commercial Vehicle Insurance: Inclusions

Commercial vehicle insurance policy compensates for personal, medical, and financial losses that are incurred due to damage resulting from theft, accidents, and natural disasters.

Most of the commercial vehicle insurance companies provide cashless compensation for getting your commercial vehicle repaired at their registered workshops.

There are a plethora of commercial insurance companies that provide customized commercial vehicle insurance plans to meet the different needs of their customers.

Here is a list of the benefits that commercial vehicle insurance policy offers:

Loss/ damage to the insured commercial vehicle resulting due to:

  • Fire, self-ignition, explosion or lightning
  • Riots and strike
  • Theft, housebreaking, and burglary
  • Malicious acts
  • Flood, hurricane, tempest, storm, and typhoon
  • Hailstorm, inundation cyclone, frost
  • Landslide and rock slide
  • Earthquakes
  • Terrorist activity
  • Accident (by external means)

Personal Accident claims are also covered under this policy. It includes permanent total disability/ accidental death of the paid driver and the owner.

Commercial vehicle third-party insurance provides cover in case of an accident involving your insured commercial vehicle and a third-party vehicle. It will cover the loss or damage caused to the third-party property, vehicle, bodily injuries and death.

An option to boost the policy benefit by opting for various add-on covers, at an additional premium.

Prevent unnecessary losses to your business.

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Commercial Vehicle Insurance: Add-on Covers

You can also enhance your scope of commercial vehicle insurance coverage by opting for add-on covers on the payment of an additional premium. While buying commercial vehicle insurance comparison the add-on covers will help you to make an informed decision.

The following are some add-on covers that you may consider while buying commercial vehicle insurance online:

  • Accessory Cover: Cover for loss of accessories.
  • Legal Liability : Legal liability covers to the paid driver/conductor/non-fare paying passengers.
  • Personal Accident Cover: Personal accident benefit to the owner/driver and any other named person apart from an employee and vehicle cleaner/ conductor/ paid driver.
  • Zero Depreciation Cover: To get the full value of the vehicle in case of loss or damage
  • Towing Cover: Road-side assistance in case of sudden break-down of the vehicle.
  • Engine Protector: It covers the consequential damages to the vehicle engine.

Commercial Vehicle Insurance: Exclusions

The policy does not cover any claim arising out of the following situations:

  • Wear and tear of the commercial vehicle.
  • Consequential loss.
  • A loss incurred during a civil war.
  • Contractual liabilities are also not covered.
  • The occurrence of an accident while driving with an invalid driving license or under the consumption of alcohol.
  • Using a vehicle in accordance with ‘limitations as to use’ for instance, a private car is used as a taxi.
  • War perils, nuclear perils.
  • Electrical and Mechanical breakdown, breakage or failure.
  • In case, the policy is not active at the time of accident or loss.

Now, let us understand the different insurance plans available for every category of commercial vehicle.

Goods Carrying Vehicle Insurance

Goods carrying vehicle insurance covers the vehicles against loss or damages due to man-made and natural calamities such as theft, fire, explosion, flood, earthquake, landslide, accidental damages, personal accident and third-party liability. Goods carrying vehicles help in smooth growth of the nation’s economy by transferring the goods within the country and globally.

The goods carrying vehicle insurance can be bought for vehicles such as trucks, trailers, tractor-trailers, etc.

Salient Features of Goods Carrying Vehicle Insurance:

Listed below are some of the key features of goods carrying vehicle insurance:

  • The policy offers both third-party liability and own-damage cover.
  • Goods carrying vehicles such as trucks, trailers, Tractor-Trailer etc. can be insured under goods carrying vehicle insurance, for example truck insurance to cover goods carrying trucks.
  • Cashless claim facility to be availed across the country at registered garage.
  • The policy benefits can be enhanced further by opting for various add-on covers.
  • The insured vehicle is covered for loss or damages sustained during an accident, third-party liability, damages due to man-made disasters such as theft, vandalism etc.
  • It covers natural calamities causing a threat to the insured vehicles such as flood, storm, earthquake, landslide etc.
  • No Claim Bonus to be earned for every claim-free year up to a defined percentage based on the policy terms.

Goods Carrying Vehicle Insurance: Inclusions

The list of inclusions for goods carrying vehicle insurance includes:

  • Third-Party Liability Cover: The policy covers the insured vehicle for any liability arising out of accidental injury, bodily damage or death of a third party.
  • Loss Due to Natural Disasters: Damage, loss, or due to natural calamities are covered. For example, if your goods carrying pick up van gets damaged due to a cyclone, your pick up van insurance will cover the losses incurred.
  • Man-made Calamities: Man-made disasters such as theft, vandalism etc. are covered, where the insured pays up to the full value in case the vehicle is untraceable, under ‘total loss’ category.
  • Personal Accident Cover: Owner/driver is covered for personal accidental damages or loss up to a certain percentage of Sum Insured, including the treatment cost. On payment of an extra premium, even co-passengers can be covered.
  • Loss Due to Natural Disasters: Damage, loss, or due to natural calamities are covered. For example, if your goods carrying pick up van gets damaged due to a cyclone, your pick up van insurance will cover the losses incurred.

Goods Carrying Vehicle Insurance: Exclusions

The list of exclusions for goods carrying vehicle insurance includes:

  • Illegal Driving: If you do not have a valid and authorised driving license, your goods carrying vehicle insurance is of no use. If you drive under the influence of alcohol or drugs then you are not covered under goods carrying vehicle insurance policy.
  • Mechanical and Electrical Breakdown: Any mechanical and electrical breakdowns are not covered by your goods carrying vehicle insurance policy.
  • Depreciation: Goods carrying vehicle insurance plan does not offer coverage against depreciation in the value of the vehicle over the period.

Passenger Carrying Vehicle Insurance

Passenger carrying vehicle insurance provides coverage against accidental damages, fire and explosion, man-made calamities such as theft, natural calamities, personal accident, along with third-party liability cover. The passenger-carrying vehicles are intended for the carriage of passengers.

Passenger Carrying Vehicle Insurance Features

Below are the key features of passenger carrying vehicle insurance:

  • This insurance can be bought for various passenger-carrying vehicles such as bus, taxi, passenger-carrying vans etc.
  • The policy premium is decided based on the type of vehicle, cubic capacity, the zone of registration, Licensed Carrying Capacity of the vehicle, Gross Vehicle Weight etc.
  • The policy covers the insured vehicle for the damages due to man-made and natural calamities.
  • No Claim Bonus to be earned for every claim-free year.
  • Some insurers offer discounts on premium deepening on the mode of buying.

Passenger Carrying Vehicle Insurance Inclusions

The inclusion list of passenger carrying vehicle insurance includes:

  • Cover for Accidental Damages: The policy covers the vehicle in case of an accident leading to damages or injuries.
  • Cover to Natural Calamities: Natural calamities may take a toll over the vehicle. Do not worry, it is covered as well.
  • Fire & Explosion: Total or partial loss of the vehicle due to fire or explosion is covered.
  • Personal Accident Cover: Cover to owner-driver and co-passengers (with an extra premium) are offered in case of an accident leading to injury, disability or death.
  • Liability Insurance: In the case of third party liability any accidental injury, damage or death of a third party, damage to the third-party property where the insured vehicle is at fault, is covered.

Passenger Carrying Vehicle Insurance Exclusions

Passenger carrying vehicle insurance does not cover the following:

  • Illegal Driving: In case you do not possess an authorized driving license, your passenger-carrying vehicle insurance cannot help you. If you drive your vehicle under the influence of alcohol or drugs are not covered under the plan.
  • Mechanical and Electrical Breakdown: Any mechanical or electrical breakdown is not covered under your passenger-carrying vehicle insurance policy.
  • Depreciation: Depreciation in the value of your vehicle over a period also remains uncovered. Thus, while claiming your passenger carrying vehicle insurance, your insurer will compensate up to the IDV (insured declared value or current market price) of the vehicle after deducting the cost of depreciation.

Auto Rickshaw Insurance

Auto Rickshaw Insurance is a subcategory of Passenger Carrying Vehicle Insurance. The Motor Vehicle Act in India mandates buying liability only policy if auto-rickshaws are owned by an organization.

This will provide a cover for business if the rickshaw causes loss or damage to the third-party property, person, or vehicle.

Key Features of Auto Rickshaw Insurance

Following are the salient features of auto-rickshaw insurance policy:

  • It protects your auto and the owner/driver from any losses arising out of natural calamities, terrorist activities, fires, accidents, malicious acts, and theft, amongst other unfortunate events.
  • Auto rickshaw insurance also assures passengers/customers that you have a responsible business.

Auto Rickshaw Insurance: Inclusions

Auto rickshaw insurance covers the following:

  • Cover for Accidental Damages: This policy covers the auto in the case of an accident that leads to damages or injuries.
  • Cover Against Natural Disasters: Natural disasters may take a toll over your auto. There is nothing to worry about; an auto-rickshaw insurance policy offers cover against any Natural Disasters.
  • Fire: Total or partial loss caused to the auto-rickshaw due to fire is also covered.
  • Personal Accident Cover: Coverage to owner-driver and co-passengers is provided in case of an accident leading to death, disability, or injury.
  • Third-Party Loss: Any losses or damages caused to a third-party or the passengers by your auto-rickshaw are also covered.
  • Theft: This policy also covers your auto-rickshaw in case of any loss or damage caused due to theft.
  • Towing Disabled Vehicles: Auto rickshaw insurance policy also offers coverage against any damage caused to your auto in the case where it is being towed.

Auto Rickshaw Insurance: Exclusions

The following are not covered under the Auto Rickshaw Insurance Policy:

  • Drunk riding or driving without a License
  • Own damages for third-party insured
  • Consequential damages or losses
  • Contributory negligence

E-Rickshaw Insurance

E-Rickshaw along with e-carts are now registered and come under the Motor Vehicles Amendment Act 2015. The Insurance Regulatory and Development Authority (IRDA) mandates third-party insurance for battery operated 3-wheeled vehicles.

The insurance norms and procedures of e-Rickshaw insurance are similar to an auto-rickshaw insurance policy. However, only third-party insurance is available for e-Rickshaws. The amount of premium is based on the seating capacity of the vehicle.

Documents Required to Claim Commercial Vehicle Insurance

To claim commercial passenger vehicle insurance or goods carrying vehicle insurance, you will need to furnish the following documents:

  • Registration certificate of the vehicle
  • Driving license ( original copy)
  • Claim form duly signed and filled
  • Copy of FIR
  • Tax paid receipt
  • Copy of Aadhar Card
  • Fitness certificate
  • Original insurance policy papers
  • Load challan of your commercial vehicle
  • Route permit

Factors To Be Considered While Buying/Renewing Commercial Vehicle Insurance

While renewing or buying a commercial vehicle insurance policy, you should focus on the following aspects:

  • Coverage: It is important to have adequate coverage when buying a commercial vehicle insurance policy. A comprehensive commercial vehicle insurance policy is recommended for those who wish to safeguard their business and want to enjoy and have peace of mind.
  • Insured Declared Value: One of the most important things that one needs to consider at the time of renewal/buying is choosing the correct IDV in your motor insurance policy, as the compensation amount will be equal to the IDV in case of total damage or theft.
  • Discount/NCB: At the time of renewal, the policyholder should check with the insurer for any available discounts on the motor insurance premium.
  • Add-on Benefits: Select add-on covers to enhance the overall policy commercial vehicle insurance coverage.
  • Cashless Network Garages: Always ask the commercial vehicle insurance agent or provider about the list of network garages and find one within your vicinity. It will ensure convenient and timely repair of the vehicle.
  • Deductibles: Opt for deductibles only when it is possible to pay a portion of the claim from your pocket. Always check for the deductibles and clauses at the time of renewal. Opt-out for deductibles if it is not working well for you.

Note: While buying commercial vehicle insurance online, it is important to browse the web, compare commercial vehicle insurance quotes and avail the best deal.

What are the Factors That Determine Commercial Vehicle Insurance Price?

The following parameters are considered while determining the price of commercial vehicle insurance e.g. goods carrying vehicle insurance or passenger carrying vehicle insurance:

  • IDV of the vehicle
  • Age of the vehicle
  • Zone of Registration
  • Type and model of the vehicle
  • Fuel type of vehicle

Commercial Vehicle Insurance FAQs

  • What is IDV in my Commercial Vehicle Insurance policy?

    The IDV of a commercial vehicle/car/taxi is derived on the basis of the selling price listed by the manufacturer for a particular brand or model at the time of buying or renewing the policy. It is then adjusted for depreciation as per the age of the vehicle.

  • How is my Commercial Vehicle Insurance premium calculated?

    Factors that affect/reduce car insurance quote are:

    • Cubic Capacity (CC) of the vehicle
    • Insured Declared Value
    • City of Registration
    • Vehicle Model
    • Age
    • Coverage type ( comprehensive insurance/third party liability only policy)
    • Add-on benefits like roadside assistance, fuel assistance, etc.
    • No-Claim Bonus
  • What is loaded in a Commercial vehicle insurance policy?

    At the time of renewal, some motor insurance providers add an extra cost of your car insurance premium in the form of Loading. Usually, it comes into effect when the risk associated with an auto insurance policy owner is declared as higher than normal.

  • What does Constructive Total Loss mean?

    The vehicle is declared as a constructive total loss if the cost of accidental loss or damage repair is more than the current market value.

    When a constructive total loss claim is filed then you would need to surrender your commercial vehicle to your motor insurance provider. Vehicle ownership is also transferred to the insurer.

    The insurance provider will pay the Insured Declared Value of your vehicle after adjusting the cost of deductibles. Once your claim is settled your motor insurance policy will stand canceled. Once you get the final payment, you are no longer required to pay the premium amount until the policy is renewed.

  • What is IDV in my Commercial Vehicle Insurance policy?

    The IDV of a commercial vehicle/auto is derived on the basis of the selling price listed by the manufacturer for a particular brand or model at the time of buying or renewing the policy. It is then adjusted for depreciation as per the age of the vehicle.

  • How to make an accidental claim on commercial vehicle insurance?
    • Report the loss/damage of the vehicle immediately on the insurance company toll free no. or on their website. Provide policy no. as reference.
    • Fill up the claim form and attach a copy of driver’s driving license and Registration certificate.
    • Cashless claim facility can be availed at company’s registered garages.
    • If the garage doesn’t come under the company network then claim reimbursement is taken afterwards with proper documents.
  • What is cashless and non-cashless/reimbursement claim Under Commercial Vehicle Insurance?

    Cashless Claim means that the insurer will not be dealing with any physical cash while settling a claim. The insurer will pay the garage directly for the repair. This is only possible if the garage that the insurer took the vehicle to is part of the listed network of garages that the company is associated with.

    Non-Cashless / Reimbursement Claim means that the insured chose a garage that is not part of the company’s network. In this case, the insured will need to pay the cash to the garage directly and it will be reimbursed when they produce the same original bills and payment receipts to the insurer.

  • What is the amount to which I need to insure my commercial vehicle? How is it related to the IDV of the vehicle?

    You need to insure your commercial vehicle to the amount equivalent to its Insured Declared Value or the IDV. Under commercial vehicle insurance, the IDV amount refers to the maximum amount up to which an insurance company will cover the partial/ total damage sustained on the vehicle. You cannot opt for coverage of more than the IDV of your commercial vehicle. Moreover, you can estimate the IDV of your car by reducing the depreciation amount from the ex-showroom price of your vehicle model.

  • Which commercial vehicle insurance cover should I buy? Why is comprehensive commercial vehicle insurance more expensive than liability only insurance policy?

    You should buy an auto insurance policy that at least offers liability only policy coverage. This is because buying a liability only policy is mandatory for all auto rickshaw owners under the Motor Vehicle Act of India. However, you have the freedom to opt for a comprehensive auto insurance policy that offers broader coverage including damage/ loss due to fire, natural disasters, accidents, theft as well as own damage cover in addition to the liability only cover.

    While a liability only auto rickshaw insurance policy only covers third-party liabilities, a comprehensive policy also covers damages caused to the driver and the vehicle due to external factors besides the third-party liabilities. As a result, a comprehensive auto insurance policy is more expensive than a liability only policy.

  • What is the period of a commercial vehicle insurance policy?

    Usually, a commercial auto insurance policy covers the insured vehicle for a period of one year. Few insurance companies may also offer policies with tenure of up to 2 years or 3 years. Therefore, you should check with your insurance provider about the various policy tenure options offered under their commercial auto insurance.

  • Can I continue the commercial vehicle insurance in the name of the earlier owner even after the vehicle has been transferred to my name and the same has been updated in the RTO records?

    No. You cannot continue with the commercial vehicle insurance in the previous owner’s name if you are the new owner of the vehicle and the information has been updated in the RTO records. This is because the policyholder and the vehicle owner should be the same person with the same address. You will have to get the policy transferred to your name in order to continue the insurance coverage on your vehicle. Not getting the policy transferred is a punishable offence. Moreover, such a policy will be equivalent to zero insurance coverage as all your insurance claims will be denied by the insurer.

  • What are the documents that must be submitted for a commercial vehicle insurance claim?

    At the time of filing a commercial vehicle insurance claim, you will have to submit the following documents in support of your claim:

    • Vehicle registration certificate or RC
    • Original copy of the driving license
    • Duly signed claim form
    • Policy document in original
    • Copy of the FIR
    • Copy of Aadhaar Card
    • Load challan of the vehicle
    • Receipt of paid tax
    • Certificate of fitness
    • Route permit
    • Original loss estimate
    • Original vehicle repair receipt
    • Vehicle keys (in case of theft)
  • Can a person be covered by a commercial auto insurance policy if he uses his own vehicle on the job?

    No. If a person uses his personal vehicle on the job, he will not be covered under the commercial auto insurance policy. Whether he uses his private vehicle to attend a business meeting or to run a business errand, it will not be covered under the commercial vehicle insurance.

  • How to cancel a commercial vehicle insurance plan?

    You can cancel your commercial vehicle insurance plan, provided the policy has not expired and no claims have been made on it. If you satisfy both of these conditions, then you need to inform your insurance provider about your wish to cancel the policy. Submit the documents or information required by your insurance provider. Once you submit the details, your insurance company will cancel your commercial vehicle insurance policy within a couple of weeks.

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