Knowledge Centre

Types of Commercial Vehicle Insurance You Can Buy

To put it simply, commercial vehicles are vehicles that are used for business purposes. For some, driving commercial vehicle serves as a source of livelihood, whereas, for some they constitute to be an important part of their business, without which the use of which they cannot gain profit from their business. Vehicles such as goods carrying vehicles, passengers carrying vehicles, tractor, vans, cranes, taxis, etc. constitute to be commercial vehicles. However, to ensure that your business runs smoothly, it is imperative that you opt to purchase a commercial vehicle insurance policy. Buying a commercial vehicle insurance policy gives you peace of mind and also saves you from facing any financial or legal hassles.

Types of commercial vehicle insurance

Third party insurance: According to the Motor Vehicles Act, 1988, every vehicle owner including commercial vehicle owner has to insure his vehicle with a third party  insurance. This type of insurance insures the policyholder against any legal liabilities arising out of damages caused to third person or property. This type of commercial vehicle insurance policy does not provide any benefits to the vehicle and only covers third party liability. 100% compensation is provided to third party in the event of death or permanent total disability, whereas 50% compensation is given to the third party in case of loss of one limb or sight of one eye.

Comprehensive insurance: This type of commercial vehicle insurance is optional and is not mandatory as per the law. However, it is always advisable to insure the vehicle with a comprehensive policy as it offers you coverage for damages caused to your vehicle, third party or property. This insurance safeguards your vehicle  against damages arising out of man-made and natural calamities. It also covers the policyholder’s third party liability arising out of death, injury or property damage caused to third-party by the insured’s vehicle.

Inclusions of commercial vehicle insurance policy:

  • Covers the vehicle against damages caused due to accident, theft, explosion, terrorism, strike, earthquake, flood storm and others.

  • Covers third party liability i.e. providing compensation to third person or property in case of damages, bodily injury or death.

Major exclusions of commercial vehicle insurance policy:

  • This insurance cover does not cover the factor of depreciation

  • Electrical and mechanical breakdown is not covered

  • Does not provide coverage in case of drunk driving or driving without a valid driving license

Factors that influence the premium of commercial vehicle insurance:

The most important factors that affect the premium you pay for third party are:

  • Vehicle’s age

  • Sub class – GCV/PCV/Tractor etc

  • Fuel type

  • Make and model

  • Insured declared value

  • Location of registration

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

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