Commercial Vehicle Insurance

Commercial vehicles are an important mode of transportation. These vehicles usually include trucks, vans, trailers, buses, taxies, coaches, carriers, shovels, tractors, cranes, mobile rigs, bulldozer, 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 tour and travel.

Commercial vehicles are basically heavy-duty vehicles that are used on a daily basis to carry out vigorous tasks. They have an important contribution to bulk transportation for many businesses. And such heavy-duty commercial vehicles are always prone to road accidents, unpredicted damages while driving and also natural disasters. That’s why commercial vehicle insurance is imperative to cover these set of wheels against those odds!

Why is Commercial Vehicle Insurance Important?

Commercial Vehicle insurance precisely covers road perils that a commercial vehicle might face. It is beneficial for your business to cover those commercial vehicles against unforeseen events that may cause a huge financial drain. As mentioned above, the vehicles that are covered under the policy are passengers carrying vehicles, private/public travel trailers, taxies, tractors, cranes, mobile rigs, bulldozer, etc.

The policy covers third-party liabilities wherein the damage is caused to a third person, his/her property or vehicle. Other than this, a comprehensive insurance policy covers damage that is caused to your vehicle and a third-party. Without commercial insurance, any such incident can lead to a huge monetary loss and put anyone in a difficult situation. You can look for commercial vehicle insurance quote online as well to fit with your budget.

Key Features of Commercial Vehicle Insurance

Commercial Vehicle Insurance Policy comes loaded with some salient features. Some of these features are listed below:

  • Coverage is provided to both public and private carriers including special types of goods carrying vehicles.
  • Protection from damage caused due to natural disasters.
  • Protection from damage caused due to man-made calamities such as theft, fire, collision, etc.
  • Third-party person/vehicle/ property damage cover.
  • Personal accident cover to the driver and the owner.

Types of Commercial Vehicle Insurance

Commercial Vehicles are of two types: Passenger Carrying Vehicle and Goods Carrying Vehicle. While passenger-carrying vehicles are intended for the carriage of passengers, goods carrying vehicles help in smooth growth of the nation’s economy by transferring the goods within the country and globally. Hence, safety of these vehicles should be the utmost concern. These commercial vehicles can be covered under Goods Carrying Vehicle insurance and Passenger Carrying Vehicle insurance. The scope of coverage is more or less the same for both the insurance policies.

Goods Carrying Vehicle Insurance

It covers the insured 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. The policy can be bought for goods carrying vehicles such as trucks, trailers, tractor-trailer etc.

Salient Features of Goods Carrying Vehicle:

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.
  • Cashless claim facility to be availed across the country at registered garages
  • 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: Coverage

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 or loss or due to natural calamities are covered.
  • 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.

What’s not Covered Under Goods Carrying Vehicle Insurance?

There are certain things that are not covered under Goods Carrying Vehicle Insurance. They are:

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

Passenger Carrying Vehicle Insurance

This insurance policy offers coverage against accidental damages, fire and explosion, man-made calamities such as theft, natural calamities, personal accident, along with third-party liability cover.

Salient Features of Passenger Carrying Vehicle Insurance:

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: Coverage

The inclusion list of passenger carrying vehicle includes:

  • Coverage for Accidental Damages: The policy covers the vehicle in case of an accident leading to damages or injuries.
  • Coverage to Natural Calamities: Natural calamities may take a toll over the vehicle. Don’t 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: Coverage to owner-driver and co-passengers (with an extra premium) is offered in case of an accident leading to injury, disability or death.
  • Liability Insurance: In the case of third party liability due to accidental injury, damage or death of a third party, where the insured vehicle is at fault, is covered.

What’s not Covered Under Passenger Carrying Vehicles?

Passenger Carrying Vehicle Insurance does not cover the following:

  • Illegal Driving: In case you don’t possess an authorized driving license, your passenger-carrying vehicle insurance can’t 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 of time also remains uncovered.

Auto Rickshaw Insurance:

Auto Rickshaw Insurance is a sub-category of Passenger Carrying Vehicle Insurance. The Motor Vehicle Act in India mandates buying Liability One Policy if auto-rickshaws are owned by an organization. This will provide a cover for business if the rickshaw causes losses or damages to the third-party vehicle, person, or property.

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: Coverage:

An Auto Rickshaw Insurance Plan covers the following:

  • Coverage for Accidental Damages: This policy covers the auto in the case of an accident that leads to damages or injuries.
  • Coverage to Natural Disasters: Natural disasters may take a toll over your auto. There is nothing to worry about; an Auto Rickshaw Insurance Plan offers coverage to 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 Losses: 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.

What’s not Covered Under Auto Rickshaw Insurance Policy?

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 is 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 setaing capacity of the vehicle.

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 insurance companies provide cashless compensation for getting your vehicle repaired at their registered workshops.

There are plenty of 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 rockslide
    • 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.
  • Third-party insurance 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 vehicle, bodily injuries and death.
  • An option to boost the policy benefit by opting for various add-on covers, at an additional premium.

Add-on Covers Provided in Commercial Motor Insurance Policy

You can also enhance your scope of coverage by opting of an add-on cover on paying an additional premium. Some of the add-ons that you can opt for as follows:

  • Accessory Cover: Coverage for loss of accessories
  • Legal liability cover 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: In order 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: To cover the consequential damages to the vehicle engine

Commercial Vehicle Insurance Policy: Exclusions

The policy does not cover any claim arising out of:

  • Wear and tear of the commercial vehicle
  • Consequential loss
  • A loss incurred during a civil war
  • Contractual liabilities are also not covered
  • An accident resulting when driving with an invalid driving license or after the consumption of alcohol
  • Usage of vehicle otherwise than in accordance with 'limitations as to use' (in case of a private car being 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

Top Insurance Providers Offering Commercial Vehicle Insurance

Following is the list of General Insurance companies that offer Commercial Vehicle Insurance:

Insurance Provider

Goods Carrying Vehicle Insurance

Passenger Carrying Vehicle Insurance

Miscellaneous Vehicle Insurance

HDFC ERGO Commercial Vehicle Insurance

Yes

Yes

Yes

Digit Vehicle Insurance

Yes

Yes

Yes

USGI Vehicle Insurance

Yes

Yes

-

Bajaj Vehicle Insurance

Yes

Yes

Yes


Commercial Vehicle Insurance Claim Process

Claiming commercial vehicle insurance can be an easy victory with the right approach. To get the claimed amount reimbursed without a hassle it is important that you immediately notify your insurance provider about the loss or damage.

You can register a claim by calling them on their toll-free helpline number or write to them on their customer helpline email id.

Nowadays, most of the commercial vehicle insurance providers offer claim forms online as well. While filing a claim, the following details are required from the insured’s end:

  • Time and date of loss
  • Policy number for reference
  • The location where the incident took place
  • A brief description of the incident
  • Name & contact number of the person filing the claim

Documents Required for Claiming Commercial Vehicle Policy

In order to claim commercial passenger vehicle insurance or goods carrying vehicle insurance, you’ll 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

Commercial Vehicle Insurance Policy Renewal

Goods carrying vehicle insurance or passenger carrying vehicle insurance needs to be renewed on time to ensure the policy benefits continuously. The policy is possible to be renewed online as well. You just need to visit the official website of the insurer and fulfil the renewal formalities online. Pay the premiums online and get the policy renewed instantly.

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 auto insurance policy is recommended for those who wish to safeguard their business and want to enjoy their 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 definitely 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 coverage.
  • Cashless Network Garages: Always ask the insurance 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’s possible to pay a portion of the claim from your own pocket. Always check for the deductibles and clauses at the time of renewal. Opt-out for deductibles if it’s not working well for you.

Commercial Vehicle Insurance Cost

Subject to deduction of depreciation, commercial vehicle insurance price or IDV is fixed at the commencement of the policy. The IDV is decided based on the manufacturer’s listed selling price and brand of the vehicle. However, depreciation is a major factor that contributes a lot to commercial vehicle insurance. With age, the value of a vehicle depreciates and based on this rate, IDV is decided. Here’s how:

Vehicle Age

Depreciation Rate

Within 6 months

Nil

Between 6 months to 1 year

5%

Between 1 year to 2 years

10%

Between 2 years to 3 years

15%

Between 3 years to 4 years

25%

Between 4 years to 5 years

35%

Between 5 years to 10 years

40%

Exceeding 10 years

50%


Determining Factors of 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

How to Calculate Commercial Vehicle Insurance Premium?

You shouldn’t buy a policy out of compulsion or in rush. Before signing on the dotted line, you should compare the policies available online based on the offerings, premium rates, features and benefits and claim settlement ratio of the insurers. You can approach an aggregator website such as Policybazaar.com, where you can compare different commercial vehicle insurance quotes. Moreover, by using a motor insurance calculator, you can get a rough idea about how much you are going to pay a premium.

Written By: PolicyBazaar - Updated: 27 November 2019
Q:

What is IDV in my Commercial Taxi or Vehicle Insurance policy?

Ans:

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.

Q:

How should I fix the IDV of my vehicle in the auto insurance policy

Ans:

The IDV of a vehicle is fixed after deducting the cost of depreciation on its parts from the selling price. The value of any extra accessories will be deducted separately. In the case of total constructive loss, the rates that will be applicable will be as mentioned in the table below.

Depreciation Schedule for Fixing the Insured Declared Value of the Commercial Vehicle:

Age of the Commercial Vehicle     

Depreciation (in percentage)

Up to six months

5

From six months to one year

15

From one year to  two years

20

From two years to  three years  

30

From three years  to four years  

40

From four years  to five years

50

Vehicles that are older than 5 years their IDV can be fixed mutually by the insured and the insurer.

Q:

How is my Commercial Vehicle Insurance premium calculated?

Ans:

Factors that affect/reduce car insurance quote are​:

1.Cubic Capacity (CC) of the vehicle

2. Insured Declared Value

3. City of Registration

4. Vehicle Model

5. Age

6. Coverage type ( comprehensive insurance/third party liability only policy)

7. Add-on benefits like roadside assistance, fuel assistance, etc.

8. No-Claim Bonus

Q:

What does Constructive Total Loss mean?

Ans:

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.

Q:

What is loading in Commercial vehicle insurance policy?

Ans:

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 auto insurance policy owner is declared as higher than normal.

Q:

What does commercial vehicle insurance plan cover?

Ans:

The following are the incidents that a commercial vehicle insurance plan does cover.

1. A comprehensive commercial vehicle insurance plan does cover damages to the insured vehicles due to natural calamities such as fire, lightning, explosion, flood, earthquake, storm and or man-made perils like terrorism, riot, strike and malicious act.

2. A commercial vehicle insurance plan covers the cost of treatment due to injuries to the driver. The personal accident cover can also be extended for an additional quote to other occupants in the insured vehicle.

3. Third party liability cover of a commercial vehicle insurance plan compensates for property damage and accidental physical injury and death of the third party.

4. In case of theft and total loss of the insured vehicle due to accidents, a commercial vehicle insurance plan offers full compensation.

Q:

What is not covered under commercial vehicle insurance plan?

Ans:

Not all types of damages and situations are covered by comprehensive commercial vehicle insurance policies online. A commercial vehicle insurance company imposes some exclusion when it comes to the coverage of a comprehensive commercial vehicle insurance policy online.

1. Wear and tear and mechanical and electrical breakdown of the commercial vehicle is not included in the coverage of commercial vehicle insurance online policies

2. A commercial vehicle insurance company doesn’t cover the loss if the commercial vehicle is used beyond the limitations.

3. If the commercial vehicle is used beyond the specified geographical area coverage of commercial vehicle insurance policies online is not available

4. A commercial vehicle insurance company offers coverage against only the original damage and not any consequential or subsequent loss

5. A commercial vehicle insurance policy online doesn’t offer coverage losses due to ionizing radiation, nuclear perils and war

A commercial vehicle insurance company doesn’t cover claims due to of contractual liability

Q:

What is IDV in my Commercial Vehicle Insurance policy?

Ans:

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.

Q:

How should I fix the IDV of my vehicle in the auto insurance policy?

Ans:

The IDV of a vehicle is fixed after deducting the cost of depreciation on its parts from the selling price. The value of any extra accessories will be deducted separately. In the case of total constructive loss, the rates that will be applicable will be as mentioned in the table below.
Depreciation Schedule for Fixing the Insured Declared Value of the Commercial Vehicle:

Age of commercial vehicle

Depreciation (in %)

Upto 6 months

5

From 6 months to 1 year

15

From 1 year to 2 years

20

From 2 years to 3 years

30

From 3 years to 4 years

40

From 4 years to 5 years

50

Q:

How to make accidental claim on commercial vehicle insurance?

Ans:

(a) Report the loss/damage of vehicle immediately on the insurance company toll free no. or on their website. Provide policy no. as reference.
(b) Fill up the claim form and attach a copy of driver’s driving license and Registration certificate.
(c) Cashless claim facility can be availed at company’s registered garages.
(d) If garage doesn’t come under company network then claim reimbursement is taken afterwards with proper documents.

Q:

What is cashless and non-cashless/reimbursement claim Under Commercial Vehicle Insurance?

Ans:

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.

Q:

How does commercial vehicle insurance works?

Ans:

Commercial vehicle insurance works by providing insurance coverage to any vehicle that you use for business purposes, and for your commercial drivers. As a business owner, you can get commercial vehicle coverage for a single vehicle or a fleet of vehicles. A commercial auto policy can include several different types of optional coverage, allowing you to adjust the policy coverage to your particular business circumstances and the use of your vehicles.

In the event of an incident, such as damage to one of your commercial vehicles from weather, an accident or other incident, you can file a claim and receive compensation that will help to cover the cost of repairs. If you or one of your drivers is at fault in an accident that injures another person or damages their property, that person can file a claim with your insurance company. In this case, your commercial vehicle liability insurance will cover the costs of the claim, up to the limit of your policy.

Many business owners choose to buy a Comprehensive insurance plan with IMT23 and PA cover to owner driver to cover the costs of large liability claims that exceed the limits of the vehicle liability policy.

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