All you need to know about Commercial Vehicle Insurance

Commercial vehicles like taxis, autorickshaws, school buses, vans and trucks are different from normal personal vehicles like cars and bikes. They have a different purpose for usage altogether. 

Hence, the terms and conditions, and laws relating to these commercial vehicles are also different. One of the important factors that commercial vehicle owners should be aware of is the insurance policy.

If you are a commercial vehicle owner, read on to get a deeper understanding of commercial vehicle insurance.

What is a commercial vehicle insurance? 

A commercial vehicle insurance is a type of insurance policy that covers commercial vehicles like cabs, vans, trucks, etc. This insurance policy will cover damages and losses caused by a commercial vehicle to another vehicle and vice versa. Damages caused due to accidents, collisions, natural calamities, fire, theft are the major factors covered by this policy. You can either opt for online commercial vehicle insurance or buy one through an insurance agent.

Types of commercial vehicle insurance

Depending on the extent of coverage offered, commercial vehicle insurance policies are classified into two:

• Liability only policy - In this policy, any liabilities owed by you to another person due to the damages caused by your commercial vehicle will be covered, i.e., if your commercial vehicle causes damage to another person’s vehicle or property or causes injury to another person, then those liabilities will be covered under this policy. If the owner/driver of the vehicle doesn’t have a Personal Accident Cover, then injuries caused to the owner/driver will also be covered under this. However, this policy does not cover damages caused to your own vehicle due to natural calamities, fire, or accident. Only third-party liabilities would be covered under this.

• Standard package policy - Similar to a liability-only policy, a Standard Package policy additionally covers for damages caused to your own vehicle due to natural calamities, fire, theft of accidents i.e. it covers for the following factors

• Damages caused to the third party’s vehicle or property.
• Injuries caused to the third party.
• Damages caused to your own vehicle due to accident, fire, theft, and natural calamities.
• Injury or death caused to the owner/driver if the person doesn’t have a personal accident cover.

You can further extend the coverage of this policy with add-ons.

Add-ons for commercial vehicle insurance - If you are opting for Standard Package policy, you can further extend the policy coverage by adding add-on benefits to this policy. It must be noted that these add-ons can only be bought with Standard Package policy and not with Liability-Only policy.

• Personal Accident Cover - You can buy a personal accident cover along with your Standard Policy. If you don’t have a standalone personal accident cover, then it is mandatory to buy it. It will cover for injury/death caused to the owner/driver.
• Unnamed PA cover - This add-on will cover for injuries/death caused to your co-passenger.
• Legal liability - If any of your employees sue you against damages/injuries caused to them, this add-on will take care of the legal liabilities associated with it.
• IMT 23- Damages caused to the lamps, tyres, tubes, mudguards, bonnet, side part bumpers, headlights and paintwork, even if your vehicle is partially damaged will be covered in this add-on.
• Electrical Accessories - If you have any extra electrical accessories fitted onto your vehicle which are not a part of the manufacturer model, then any damages caused to these parts will be covered in this add-on.
• Non-Electrical Accessories - If you have fitted any non-electrical accessories that are not a part of the model, then this add-on covers for damages caused to them.
• Special Exclusions & Compulsory Deductibles - Covers for loss or damage to lamps, tyres, tubes, mudguards, bonnet, side part bumpers, headlights and paintwork in the event that your vehicle is completely damaged.

What is covered in a Standard Package policy?

• Accidental damages - Damages caused to your commercial vehicle due to accidents.
• Theft - If your vehicle is stolen or recovered in a damaged state.
• Fire - Your vehicle is damaged in a fire.
• Natural disasters - If natural calamities like earthquake, floods, cyclones etc., cause damage to your vehicle.
• Personal accident cover - Injury/ death caused to the driver/owner.
• Third-party liability - Damages caused to another person’s vehicle or property, or injury/death caused to third-party.
• Towing vehicles - Damages caused by your commercial vehicle to another vehicle while it is being towed.

What is not covered in a Standard Package policy?

• Riding without a license - If during an accident, you are caught driving without a valid license, then you will not be eligible to claim the insurance policy.
• Contributory negligence - If you purposefully cause damage to your vehicle such as riding vehicle during a flood etc., you will not be eligible to claim the policy.
• Consequential damages - Damages that are not a direct result of natural calamities will not be covered.

Types of commercial vehicles

The different types of commercial vehicles can be classified into the following insurance policy categories:

1. Passenger Carrying Vehicle Insurance: This insurance policy is intended for passenger-carrying vehicles like taxis, cabs, auto-rickshaws, school buses, privates buses etc., which carry several passengers on a daily basis.
2. Goods carrying vehicle insurance: Vehicles that carry goods such as lorries, tempos and trucks fall under this category. Commercial vehicle insurance, apart from covering your vehicle and the driver in the event of an accident, will also cover for the goods present inside them.
3. Heavy Commercial Vehicle insurance: Vehicles like bulldozers, cranes, lorries, trailers, etc are filed under the heavy commercial vehicle insurance category. This can especially come in handy if you are the owner of a heavy-duty vehicle business.
4. Special Vehicle insurance: Apart from the aforementioned categories, special vehicles such as those used for farming comes under this category. Tractor insurance is one of the commonplace insurance policy which falls in this category. Insurance policies for mining and construction equipment are the other various types.

Written By - Arya