If you are planning to buy a commercial vehicle for your business, then you may have also given a thought to buying a good, solid insurance policy for the vehicle. Any commercial vehicle plying on Indian roads has to have a valid commercial vehicle insurance policy as per the Motor Vehicles Act of 1988. If this is your first time buying a commercial vehicle insurance policy, then it is natural that you may have some questions regarding it, as it differs quite a bit from other motor insurance policies. To help you out, we take a look at 4 FAQs about commercial vehicle insurance and answer them for you.
1. What kind of coverage does a commercial vehicle insurance policy provide?
The mandatory third-party commercial vehicle insurance policy provides financial protection to you against damages caused to any individual or property due to the involvement of the insured vehicle.
A comprehensive commercial vehicle insurance policy will provide higher levels of coverage. You can expect coverage against theft, fire explosion of lightning, riots or strike, malicious or terrorist activity, and natural disasters such as flood, typhoon, hurricane, storm, tempest, cyclone, frost, and so on. The coverage of a comprehensive plan may differ from insurer to insurer.
2. How can one determine whether their vehicle requires commercial vehicle insurance?
Any vehicle that you intend to use for business purposes can be deemed as a commercial vehicle. Vehicles that do the following functions require a commercial vehicle insurance policy:
- Transport heavy equipment such as machinery from one place to another
- Deliver wholesale and/or retail material
- Transport housekeeping tools for your business
- Carry materials that are inflammatory or intoxicating in nature
- Move cranes from one site to another
- Act as a cab or a rickshaw service or do miscellaneous errands for a business
- Deliver newspapers
If you head a business but use a car for your private needs only such as going to the office, then it need not be considered as a commercial vehicle. You can secure it by buying car insurance online.
3. What are the exclusions of a commercial vehicle insurance policy?
If the driver is driving the vehicle without a valid driver’s license or is under the influence of intoxicating substances, then any damages arising thereof will not be covered. Electrical and mechanical breakdowns are also excluded. If the insured vehicle is used for unlawful activities, no cover will be provided. Furthermore, damages that occur to the vehicle when they are outside of the covered geographical area may not be covered.
4. How is the premium for a commercial vehicle insurance determined?
The premium depends on the kind of vehicle as each one faces different risks.
The risks posed to a four-wheeler bus carrying passengers within city perimeters may be different than the risks posed to a multi-wheeler truck carrying cargo cross country.
For a bus, for instance, the premium may be calculated by factors such as the distance it travels in a year, the geographical area it covers, number of seats, safety measures, the profile of the passengers (people with disabilities, children, etc), and so on. For a truck, the premium is primarily influenced by the cubic capacity and the licensed carrying capacity.
We hope this article has increased your understanding of commercial vehicle insurance so that you can make an informed decision when you purchase it.