Passenger Carrying Vehicle Insurance

A passenger carrying vehicle insurance policy provides comprehensive protection to commercial vehicles involved in passenger transportation against unforeseen adversities, such as accidents, fire, theft, etc. It provides coverage against any loss or damages to the vehicles or bodily injuries to the passengers during an unfortunate incident on the road.

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What is Passenger Carrying Vehicle Insurance?

Passenger carrying vehicle insurance is a type of commercial vehicle insurance policy that provides coverage to commercial passenger carrying vehicles against unforeseen events that may result in a financial loss. It covers vehicles involved in commercial or public transportation against any kind of loss or damage that occurred in a road accident, fire accident, theft, natural calamity, etc. It also covers third party liabilities arising out of the vehicle and offers optional coverage for accidental injuries of the passengers.

Types of Passenger Carrying Vehicles in India

There are several types of commercial passenger carrying vehicles available in India. They are as follows:


Buses are used in schools, colleges and by the general public to travel from one place to another. In major cities, the government provides low-floor buses to the citizens to ease their transportation woes at cost-effective ticket prices. But people who run a business of public transportation have private buses running in the city.

Given the frequent usage of buses, the owner must cover them under a passenger carrying vehicle insurance policy. School bus insurance can be purchased to cover school buses against unforeseen adversities.


Auto-rickshaws are one of the most used modes of public transportation in India. They are easier to find and can drop right at the doorstep of the passenger, unlike buses. People who own auto-rickshaws can insure their vehicle with the help of an auto rickshaw insurance policy.

Three/Four-Wheeler Tempo

Three/four-wheeler tempos are widely used for public transportation, especially in smaller cities and rural India. Such commercial vehicles can be easily covered under a passenger carrying vehicle insurance policy.


Cabs or taxis are widely available throughout India for a comfortable and smooth transportation experience. In metro cities, people tend to book cabs from their mobile phones through apps like Uber and Ola. Although these companies do not own any cabs or taxis, the actual owner of these taxis and cabs can buy a taxi insurance policy or commercial vehicle insurance for cabs to protect them against unforeseen loss or damages.

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Importance of Passenger Carrying Vehicle Insurance

Passenger carrying vehicles are the most used mode of transportation as everybody cannot afford to purchase a bike or a car. Since hundreds and thousands of people travel through public transportation every day, it becomes the responsibility of the vehicle owner to protect the vehicle with an insurance policy. Besides, commercial vehicles spend more time running on the road and thus, are more prone to road accidents & breakdowns.

Here are some of the reasons why passenger vehicle owners need to purchase a passenger carrying vehicle insurance policy:

Protects the Vehicle from Sudden Financial Losses

Be it a road accident, theft, fire accident or a natural calamity, this commercial vehicle insurance provides financial aid to the policyholder in case these unforeseen events cause damages or losses to the vehicle.

Helps to Abide by the Law

In India, it is mandatory to cover every commercial vehicle with at least a third-party liability insurance policy. Thus, buying a passenger carrying vehicle insurance policy helps the owner to abide by the law and prevents him/her from paying hefty traffic fines in the absence of insurance papers.

Offers Coverage for Owner/Driver

This commercial vehicle insurance policy not only protects the passenger carrying vehicle from any unforeseen loss or damages but also the driver/owner of the vehicle. In case the owner-driver of the insured vehicle suffers bodily injuries or dies in a road accident, the insurance company will provide compensation under the policy.

Protects Passengers

When buying a passenger carrying vehicle insurance policy, vehicle owners can also purchase an additional cover to protect the passengers of the vehicle. This cover will compensate the passengers for any accidental injuries sustained while travelling in the commercial vehicle.

Passenger Carrying Vehicle Insurance Inclusions

A passenger carrying vehicle insurance policy covers the following:

  • Accidental Loss & Damage - Any loss or damage caused to the vehicle in case of a road accident irrespective of whether the vehicle is carrying passengers or not
  • Natural Disasters – Any damage or loss caused to the vehicle in natural disasters like floods, typhoons, earthquakes, etc.
  • Theft – Losses incurred if the vehicle is stolen and, in some cases, the contents kept inside the vehicle
  • Fire Accidents - Loss or damages sustained if the vehicle catches fire due to excessive heat of the engine or a fire mishap
  • Manmade Calamities – Loss or damages caused to the vehicle due to manmade calamities like terrorist activities, riots, etc.
  • Third-Party Liability – Any loss or damage caused to third parties in an accident resulting in third-party liabilities
  • Personal Accident Coverage - Any bodily injury or death of the owner-driver of the vehicle due to an accident caused while driving the vehicle
  • Towing Damaged Vehicle - Any damage or losses suffered by the passenger carrying vehicle while it was being towed

Passenger Carrying Vehicle Insurance Exclusions

A passenger carrying vehicle insurance policy does not cover the following:

  • Without License Driving – Any vehicle damages or injuries sustained by the passengers while the driver was driving without a valid driving license
  • Consequential Loss – Any indirect loss or consequential loss suffered by the passenger carrying vehicle
  • Drink & Drive – Any accidental loss or damages caused while the driver was driving under the influence of alcohol
  • Intentional Negligence (Contributory) – Any intentional or contributory loss caused due to the negligence of the owner/driver of the vehicle

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Passenger Carrying Vehicle Insurance Add-ons

All commercial vehicle insurance companies offer add-on covers to enhance the coverage of a basic passenger carrying vehicle insurance policy. These add-ons can be purchased in exchange for a higher premium price. Take a look at some of the most common add-on covers available under the policy below:

  • Roadside Assistance Cover: Under this cover, the insurance company offers roadside assistance to the policyholder in case the passenger carrying vehicle breaks down in the middle of the road.
  • Zero Depreciation Cover: With this policy, depreciation on the commercial vehicle or its parts is not considered while paying the claim and thus, you get the full value of the vehicle in case of a total loss.
  • Passenger Cover: This add-on provides personal accident cover to the passengers travelling in a commercial vehicle in case an accident of the vehicle leads to accidental death or disability.
  • Tyre Protect Cover: This add-on ensures that the insurance company covers any non-accidental damages sustained by the tyres of the commercial passenger carrying vehicle.

How to Raise a Claim Under Passenger Carrying Vehicle Insurance?

A policyholder can raise a claim for any unforeseen damage or loss caused to the passenger carrying vehicle offline or online. But to begin the claim process, the vehicle owner will have to inform the insurer about the accident that led to the damage.

While doing so, the following details should be provided to the insurance company:

  • Time, date and location of the incident that caused the damage
  • Policy number for reference
  • How did the incident take place?
  • Name and contact details of the owner

To begin with the commercial passenger carrying vehicle insurance claim process, the insurer will send a surveyor to assess the damages to your vehicle. The policyholder will have to submit some documents to the insurer. Based on the documents and the survey report, the insurer will accept or reject the claim. If accepted, the insurer will settle the claim amount once the vehicle has been repaired.

Before you raise a claim, it is recommended to read the policy carefully and check if it provides coverage for the mishap faced. This will ensure that your claim does not get rejected and your efforts do not go to waste.

Document Required to Raise a Passenger Carrying Vehicle Insurance Claim

At the time of raising the claim, the policyholder needs to submit the following documents:

  • Vehicle’s Registration Certificate (RC)
  • Copy of FIR
  • Driving license copy
  • Filled claim form
  • Aadhar card copy
  • Tax paid receipt
  • Insurance policy papers
  • PUC Certificate
  • Newspaper cutting, if the mishap was printed in any

No Claim Bonus Benefit

No Claim Bonus (NCB) is a renewal benefit provided by commercial vehicle insurance companies to policyholders for not raising a claim in the previous policy year. The insurer provides a specified percentage of NCB to the policyholder for not raising a claim every year. The NCB can be used to reduce the passenger carrying vehicle insurance renewal premium. Moreover, the NCB percentage increases every year if no claims are raised consecutively.

Here is a list of No claim bonus percentage granted for every claim-free year as fixed by the Insurance Regulatory & Developmental Authority of India (IRDAI):

Policy Duration Without Raising a Claim Percentage of No Claim Bonus
1 year without raising a claim 20%
2 consecutive years without raising a claim 25%
3 consecutive years without raising a claim 35%
4 consecutive years without raising a claim 45%
5 consecutive years without raising a claim 50%

However, there are two conditions under which the insurer will not provide the No claim bonus to the policyholder. They are as follows:

  • When the policyholder raises a claim
  • When the policyholder does not renew the policy within the specified 90 days of policy expiration


Written By: PolicyBazaar

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