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Private or Commercial: Which car insurance do you need?

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Published on November 27, 2020. EST READ TIME: 4 MIN

Cars are not just a great personal possession; they can also be a great tool for business. For many people, it is their first love and lifelong passion. For others, it is the source of livelihood as their taxi and for many people it is the lifeline of their business, being used to move around goods or people. Getting your car properly insured is not just a legal requirement, but also a good financial decision. It allows you to cover any expenses arising out of any unforeseen situation. It brings to you, the peace of mind that your vehicle is safe in case of any emergency.

Private Vs Commercial Car Insurance: Which is better?

Many people do not know the difference between commercial and private insurance and thus get unnecessarily confused at the time of buying insurance. The basic decision-making factor if you want to buy car insurance policy is if your car is registered as a private vehicle or a commercial vehicle. If your car has a white number plate along with black letters and digits embossed on it, it is a private vehicle. If your car has a yellow number plate with black letters and digits embossed on it, it is a commercially registered vehicle and will need commercial insurance.

Understanding Private Car Insurance and its Benefits:

The private car insurance policy is for people who use the car for their personal purposes only. For example, for travelling from one place or one city to another or for daily commutes from home to office or for dropping and picking children from school. This is the default option presented when you try to purchase car insurance policy online. It will cover accidents and damages only caused during personal usage of the car by the owner/ insurer, any family member or a driver hired for personal use of the vehicle. Claims will be denied if it is found that the car was directly used for any money-making purpose, for example as a taxi. 

Understanding Commercial Car Insurance and its Benefits:

Commercial car insurance is specifically meant to cover vehicles, which will be used for money-making purposes. Considering the very nature of a commercial vehicle, this insurance costs a bit higher and has stricter claim conditions. At the same time, insurance companies also realize that the claims need to be processed faster because the car is directly responsible for the owner’s income. These policies have also started to come with extra coverage options, which can be purchased by paying an additional premium. However, co-pay flexibility is comparatively lesser in commercial insurance.

 If you compare car insurance policy online, you will find out that both are designed for different purposes. Even though both may seem alike, they cannot be interchanged. Buying a commercial policy for a car used and registered for private purposes only is just a waste of money. Private policy for a commercially registered and used vehicle will lead to claim denial because of non-coverage of commercial purposes. Legally, only third-party insurance is enough, but a proper car insurance policy is a financial must-have.

Disclaimer: The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales.

This blog has been written by

S. Gopalakrishnan | Motor Insurance Expert | 40+ years of experience in insurance industry

A veteran in insurance industry. S. Gopalakrishnan is a name to reckon with in the field of reinsurance, he has headed the Reinsurance department and has rich experience in other fields of motor insurance. He loves to share his opinion on latest topics in the insurance industry and how he can help people in safeguarding their assets using insurance products.

Mr. S.Gopalakrishnan recommends "HDFC ERGO for your vehicle insurance needs, it has always put customer’s interest at the forefront, with round the clock assistance to deal with emergency breakdown issues and hassle free claims process. You can be assured of complete and reliable guidance through the whole process."

Few other articles

• Types and Kinds of Car Insurance Policies

• How to Find the Right Car Insurance Policy for You?

• Factors determining motor insurance premium

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