Difference Between Commercial and Private Vehicle Insurance

Insurance is an effective tool to provide financial help in case your vehicle gets damaged. Whether it is your private vehicle or commercial car, a vehicle insurance policy is essential when it comes to safeguarding your vehicle from all possible damages or losses. An insurance policy for your vehicle must as per the risk factor. A commercial vehicle runs more than a personal vehicle and hence it requires different insurance coverage for losses and accidental damages. It is good to know the important factors for both private vehicle insurance and commercial vehicle insurance. In this article we will learn about the features of these two types of vehicle insurance plans and the difference between them:

Private Vehicle Insurance

A vehicle insurance plan that provides coverage for your personal vehicle is known as private vehicle insurance. It is again of two types - third-party vehicle insurance and comprehensive vehicle insurance. Third-party vehicle insurance is one that provides insurance cover for third-party damages or losses. On the other hand, a comprehensive vehicle insurance policy provides coverage for third-party liabilities and own damages. Therefore, a comprehensive plan is considered a robust policy for your vehicle. Below mentioned are the details of coverage for personal insurance concerning a comprehensive vehicle insurance plan:

Coverage of a Private Vehicle Insurance Policy

  • It provides coverage against losses and damages caused because of an accident.
  • It offers coverage for the personal accident for the owner-driver.
  • It provides financial coverage against natural calamities, theft, riots, and fire.
  • It also offers coverage against third-party liabilities.

Exclusions of a Private Vehicle Insurance Policy

  • Excludes the vehicles that are used for business or commercial purposes.
  • If you have not opted for additional cover, then personal drivers are excluded from this plan.
  • Excludes coverage for passengers, however, you can opt for a rider to get your passengers protected also.

Commercial Vehicle Insurance

A vehicle insurance policy that provides coverage for vehicles of commercial purposes is known as commercial vehicle insurance. The common examples of commercial vehicles are cabs and taxis. The type of insurance coverage provided for such vehicles is different than private vehicle insurance. This is because commercial vehicle insurance covers other risks as well. These risks can be related to passengers, drivers, and the standard financial coverage offered for damage to the vehicles. This may impact your business and therefore purchasing an insurance plan for your passenger vehicle or cab gets more important.

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Coverage of Commercial Vehicle Insurance Policy

  • Provides financial security to the business of the policyholder because of damages and losses to his/her commercial vehicle in case of an accident.
  • Provides personal accident coverage for drivers.
  • Offers cover against total loss because of fire, theft, or other natural disasters.
  • Provides the option to cover passengers.
  • Includes the coverage for third-party liabilities.

Exclusions of Commercial Vehicle Insurance Policy

  • Excludes the vehicles that are used for personal purposes.
  • Excludes mechanical and electrical breakdown.
  • Excludes regular wear and tear of vehicles.
  • Damage or loss incurred due to nuclear attack, radiation, and war.
  • Damages because of the use of a vehicle beyond its limit.
  • Damages are caused due to someone who is driving the insured vehicle other than the driver who is mentioned in the policy.

Difference Between Private Vehicle Insurance and Commercial Vehicle Insurance

While both these types of vehicle insurance plans offer protection to the vehicle, however, they vary in the coverage terms as the risks are different. The below-mentioned table provides an insight into the difference between private vehicle insurance and commercial vehicle insurance:

Specification

Private Vehicle Insurance

Commercial Vehicle Insurance

Premium and Risk Factor

The premium is lower as compared to the premium of a commercial vehicle.

 

Lower because of lesser kilometers by a personal vehicle.

Higher insurance premiums.

 

Higher premiums because a commercial vehicle runs higher kilometers.

Mandatory Cover

Third-party liability cover

With third-party liability insurance drivers and passengers, the cover is also mandatory.

Coverage

Offers financial protection towards losses or damage because of fire, theft, and natural disasters, riots, etc.

 

Third-party liability cover.

 

Personal accident cover is provided for the owner-driver.

Offers financial protection for any loss to the business because of damages to an insured commercial vehicle.

 

Provides coverage for drivers and optional cover for the passengers.

 

Offers third-party liability cover.

Documents Needed for Claim

Registration Certificate of the vehicle, Driving License, FIR, if required, Original bills of repair, insurance policy’s copy, receipts of cash in case of reimbursement

Registration Certificate of the vehicle, vehicle’s Fitness Certificate, Driving License, Load Challan, FIR, License Permit, if a needed sheet of the trip, Taxation book, insurance policy's copy.

Claim Process

FIR is needed or on the spot survey or inspection by the insurance provider is done and after that claim, the process will be initiated.

An FIR is not mandatory unless needed. Get the vehicle repaired at the network workshop or get the reimbursement after the repair.

 

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Which Is Better Commercial Vehicle Insurance or Private Vehicle Insurance?

When it comes to comparing private vehicle insurance and commercial vehicle insurance, you have to understand your needs. Are you going to use your vehicle for commercial purposes like a cab for transporting the students or employees or as a taxi or are you going to use it for self like using it for your personal purposes such as for going to market or visiting a relative? So, it entirely depends on the requirements or needs of your vehicle.

Moreover, it is not recommended to use a personal or private vehicle for commercial or business purposes or earning money. This is because it can invite guaranteed penalties by the transport authority of India. Therefore, commercial vehicle insurance should be purchased if you are going to use your vehicle for commercial purposes, while private vehicle insurance should be purchased if you are going to use your vehicle for your purposes.

Many digital insurance providers offer many new features and advantages and you can purchase them online. You can go to the website of the insurance provider or install their mobile app for knowing more about personal and commercial vehicle insurance.

The Final Words:

Before you are going to finalize a vehicle insurance policy whether it is private or commercial vehicle insurance, it is recommended to compare different insurance plans. You can compare a vehicle insurance policy online which is a simple process. You can as well compare the quotes of different vehicle insurance plans online and understand the premium and coverage for the same. The higher coverage with a low premium should be your main objective while you are finalizing your vehicle insurance policy.

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