Commercial Vehicle Insurance

What is Commercial Vehicle Insurance?

A commercial vehicle helps run your business smoothly, and any damage/theft to the vehicle may lead to huge financial loss to your business. In order to cope-up with this uncertainty, you need to have a right insurance for your commercial vehicle. Commercial Vehicle Insurance is specially designed to provide cover against damage/ loss to your vehicle, or any third party liability that may occur due to the fault of your vehicle. Getting commercial vehicle insurance is also mandatory on legal grounds under the Motor Vehicles Act, 1988. Commercial vehicles include those which are used for commercial purposes, such as buses, vans, taxis, school buses, trucks, mini trucks, cranes, Loader, Excavator, etc.

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Why should I Buy Commercial Vehicle Insurance?

If you are running a business and having a commercial vehicle, it is quite important to buy commercial vehicle insurance. Here are some top reasons to buy Commercial Vehicle Insurance.

Legal Protection

Having a valid commercial vehicle insurance confirms that you are abiding by the law. By buying a suitable commercial vehicle insurance, you stay protected against any third party liability that may arise due to bodily injury/ property damage caused to the other vehicle.

No Financial Worries

By choosing a commercial vehicle insurance, you do not have to pay for the third party liability or costs that may incur due to your bodily injury or any damage caused to your commercial vehicle. Buying a comprehensive commercial vehicle insurance provides you a complete cover and let you drive your business vehicle worry-free.There are times, when business vehicles carrying precious goods are wrecked or robbed during transit. A commercial vehicle insurance provides coverage against the financial loss occurred in such scenarios.

Employee Protection

Your commercial vehicle insurance helps you pay for your employees, in case your employee becomes injured driving the business vehicle during the working hours. It covers legal liability against death and/or injury caused to the passengers by your own vehicle.

Pays for Vehicle Repairs

With commercial vehicle insurance, you can get the costly repairs for your vehicle all at affordable cost or free of cost under the scope of your policy. By getting vehicle repairs on-time, you can easily maintain the resale value of your vehicle.

Cashless Network Garages

Insurers have tied up with the workshops/garages known as network garages to provide the cashless facility for the policyholders for the repairs done under the scope of coverage in different cities and towns.

What kinds of Commercial Vehicle Insurance can I opt from?

Basically, there are two types of Commercial Vehicle Insurance.

1. Liability Only Policy/ Third Party Commercial Vehicle Insurance

This commercial vehicle insurance provides cover against any liability towards property damage and bodily injury/ death caused to a third party. Some Insurers also provide cover for Owner/driver in case of accidental death, and personal total disability.

2. Comprehensive/ Package Commercial Vehicle Insurance

You never know when a vehicular accident may occur and for this, you need to ensure that you are completely covered against any loss/damage. With a Package Commercial Vehicle Insurance, your vehicle is covered for,

  • Third Party Liability

This component of the policy covers third party bodily injury/death and property damage to any third party.

  • Own Damage

This component of the policy covers damage/loss caused to your vehicle under natural calamities which includes fire, lightning, flood, hurricane, storm, tempest, inundation, cyclone, hailstorm, typhoon,frost, landslide, rockslide, explosion fire and shock damage due to earthquake and Man-made Calamities which includes burglary, housebreaking, theft, riot or strike, accident by external means, malicious act, terrorist activity and damage during travel by road, rail, inland-waterway, or air.

What are the Benefits of Buying a Commercial Vehicle Insurance?

It’s important to assess the benefits of commercial vehicle insurance and then choose an insurance policy that offers protection for your business vehicle. Here are the key benefits of a commercial vehicle insurance.

Cover for Third Party Liability

Getting a commercial vehicle insurance provides protection against legal liability to the third party resulting from bodily injury, death and property damage. A third party coverage helps you pay off the legal expenses for any third party liability which includes bodily injury or property damage.

Cover for Own Damage

Under comprehensive commercial vehicle insurance policy, any damages mentioned under the scope of policy coverage is indemnified to the policyholder which could be man made damage or damage by natural calamities.

Medical Payments Coverage

A commercial vehicle insurance also provides cover against medical expenses that are incurred due to your bodily injury caused by vehicular accident, irrespective of who is found at fault.

Avail Add-on Coverage

With a commercial vehicle insurance, you can also include add-on covers such as zero depreciation, personal accident coverage for owner/driver, and many others to enhance the scope of coverage.

No Claim Bonus

Insurers also offer a No Claim Bonus (NCB) protection that you can avail for claim free policy years for your commercial vehicle which will result in a decrease in premium for renewal year.

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How is my Commercial Vehicle Insurance Premium Calculated?

Following are the key factors that are responsible for calculating the premium amount for your commercial vehicle.

Insured’s Declared Value (IDV)

IDV is deemed to be the ‘Sum Insured’ and it is determined at the beginning of each policy period for a vehicle. Insured’s Declared Value is the current market value of your vehicle that is paid by the insurer in the event of theft or total loss of vehicle. With a lower IDV of your vehicle, you need to pay the lesser premium amount for your commercial insurance policy and vice versa.

Place of Registration

When it comes to commercial vehicle insurance rating, India is demarcated under insurance zones which are Zone A (Chennai, Delhi / New Delhi, Kolkata, Mumbai), Zone B (all other state capitals), and Zone C (Rest of India). When you register your vehicle in Zone A and Zone B, you are charged with higher premiums considering the exposure of your vehicle to accidents and theft. Commercial vehicles excluded under section 4.C.1 and C.4 are rated under Zone A or Zone C.

Gross Vehicle Weight

It refers to the maximum operating weight of a vehicle as stated by the manufacturer and it includes the chassis, body, accessories, engine, driver, passengers and goods. Higher gross vehicle weight, will incur huge losses to other vehicles and thus carries higher risk, so the insurer will also charge higher premiums to cover the risk.

Vehicle Age

The age of the vehicle also helps determine the premium amount for your commercial vehicle insurance. Insurers may charge the higher rate of premium for older vehicles, as there is more risk of electrical/mechanical breakdown, wear & tear.

Safety Devices

Commercial vehicle equipped with safety devices such as advanced braking systems, audible warning devices, light signaling devices, and mechanical and GPS speed-limiters, the insurer may charge you the lowest premium for the vehicle insurance, considering the safety of the vehicle.

Fuel Type

When buying insurance for diesel and CNG/LPG based vehicle, the premium is charged at a higher rate than for a petrol-based vehicle. The reason being the diesel and CNG/LPG run vehicles tend to have higher usage that may result to frequent break-down and wear & tear.

What are Some Smart Buyings Tips?

Following are some of the key buying tips you can follow to buy the right Home Insurance Policy.

Compare before buying: Prior buying insurance, it is wise to compare and choose the right commercial insurance for your vehicle. It is also important to read the customer reviews and feedback to ascertain, it’s the right pick.

Buy Online: Buying a policy online saves time as you can get the policy in just a few clicks of the mouse. Buying the policy online helps you grab huge discounts on the premium amount.

Pick the Insurer Wisely: Buying commercial vehicle insurance from an insurer having IRDAI certification would a right move. So, assess the profile of the insurer and then go ahead to buy the insurance policy. You should also choose an insurer that offers 24x7 support so, you can contact them anytime you need. Also ensure whether they have the quick and efficient claims settlement process.

Add-on Covers: There are various add-on covers available with commercial vehicle insurance. Primarily, you need to assess your need and then pick add-ons accordingly. Upon choosing add-on covers you need to pay additional premiums as it will provide you additional cover.

Read the Policy Wordings: Prior finalizing a commercial vehicle insurance, it would be a prudent decision to go through the policy benefits, its inclusions & exclusions and assess whether it’s the right vehicle insurance, you are looking for.

Is there any Add-on Cover/Rider with Commercial Vehicle Insurance?

Add-on covers/Riders are additional benefits provided over and above to your base insurance policy. Following are the add-on covers, that are available with the commercial vehicle insurance.

Legal Liability to Employees

This add-on provides coverage against accidental death and permanent total disability to the employees (both paid and unpaid).

Legal Liability to Passengers

This add-on provides coverage against bodily injury/death caused to the passengers (fare and non fare paying passengers) present in your commercial vehicle at the time of the accident.

Zero-depreciation

When you raise claims, insurers usually pay for the depreciated value of the replaced vehicle parts. However, by choosing the zero depreciation (Nil Depreciation) cover, you become eligible to receive the full claim amount for the damaged vehicle parts. With this add-cover, there is no need to worry about the depreciation component.

Roadside Assistance

Have you ever faced a situation with your commercial vehicle running out of fuel, breakdown, or other technical issues? You are stuck there, when there is no service center or any other assistance. Choosing roadside assistance cover with your vehicle insurance is the answer. This add-on cover provides you the swift services such as fuel refill, battery jump-start, flat tire change, towing, spare key arrangement, and many more.

Personal Accident Cover

This add-on provides cover for owner and driver in case of accidental death, Permanent Total Disablement, Permanent Partial Disablement, and Temporary Total Disablement.

No Claim Bonus Shield Cover

No claim bonus is a reward given by the insurer to the policyholder in case of a claim free policy period. By choosing no-claim bonus shield cover, you do not lose NCB benefit even if you make a claim in a policy year for your commercial vehicle.

Accessories Cover

This add-on cover pays for loss/damage to accessories fitted in the vehicle, including stereos, fans, and others. You may ask your insurer to ascertain which accessories are covered under the vehicle insurance.

Coverage for Vehicle Consumables

Engine oil, nut and bolt, washers, etc. are utilized for repairing the vehicles. By choosing this add-on cover, you are reimbursed for the cost of these consumables.

Penalty Coverage

By choosing this add-on cover, the insurer will pay for the penalty imposed on you by your client in case of damage of goods or delay in delivery of goods caused due to the accident of the vehicle.

Additional Cost Coverage

This add-on cover provides coverage against amount spent on insurance, registration, road tax, and additional expenses that may incur at the time of total loss or theft of the vehicle.

Towing Charges Coverage

In case your business vehicle met with an accident in a manner that it cannot be driven on its own and requires towing, then the cost incurred in towing is covered under this add-on cover.

(Add-on covers may vary from insurer to insurer and are available at an extra cost)

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What is Not included in my Commercial Vehicle Insurance?

The commercial vehicle insurance does not provide cover under the following circumstances:

• Mechanical and electrical breakdown

• Failure or breakage

• Wear & tear

• Consequential loss

• Any accidental loss, damage or liability incurred outside the permitted geographical region

• Loss/Damage when driving under the influence of alcohol

• Loss/Damage when driving with an invalid driving license

• Loss due to war, mutiny or nuclear risk

• Claims that don’t come under the terms of the insurance contract

• Use of vehicle for a purpose not mentioned in the policy document

• Employee(s) of the Insured other than the owner/driver of the commercial vehicle

(Note: Exclusions may vary from insurer to insurer)