Types of Commercial Vehicle Insurance in India

As per the Motor Vehicles Act 1988, commercial vehicles on public roads must have at least a third-party liability cover. One can also opt for comprehensive insurance to avail oneself of more full-fledged coverage. But what do they cover, and which should you choose, given your business needs?

Keep reading this guide to find out!

Different Types of Commercial Vehicle Insurance

The next part discusses the various commercial vehicle insurance options in India.

1. Package Policy or Comprehensive Insurance for Trucks/ Vans/ Cabs/ Three-wheelers

Though not mandated by the law, comprehensive auto rickshaw, van, bus or truck insurance provides you a safety net in multiple ways. You can even avail of similar policies if you own an auto-rickshaw or taxi business.

Comprehensive insurance plans cover major repair and replacement expenses for your vehicle following an accident. Additionally, they assure coverage for theft, natural disasters, or fire damage, along with the benefits of a third-party cover, thus reducing your business’ financial burden.

Some package policies even include driver protection features. These ensure compensation for medical costs incurred by the driver following an accident.

Most importantly, a comprehensive insurance plan can free your business from legal liabilities, as your insurer will cover any injuries or property damage caused by your commercial vehicle to a third party while driving.

2. Liability Only Policy or Third Party Cover for Auto-Rickshaws/ Taxis/ Vans

Even if you wish to avoid going for a comprehensive insurance plan, third-party policies are made compulsory for every commercial vehicle owner in India. This insurance aims to protect the policyholder from legal liabilities arising from damages to others or their property.

However, third-party commercial vehicle insurance does not cover you or your vehicle in case of a mishap. The insurer offers 100% compensation to the third party in the event of a tragic death. It guarantees 50% compensation if the other person loses eyesight or a limb in an accident involving your vehicle.

Factors Affecting the Premium of Commercial Vehicle Insurance

Understanding the factors influencing premiums is essential when choosing insurance for a commercial vehicle. Both comprehensive and third-party insurance plans have distinct factors that determine their costs.

There are specific factors that mainly affect the premium you pay for comprehensive commercial vehicle insurance, like:

● Type and Value of the Vehicle

High-end or specialised commercial vehicles generally have higher premiums due to the cost of repairs and replacements.

● Vehicle Age and Condition

Older vehicles typically attract lower premiums as their market value depreciates.

● Location

Vehicles operating in high-risk areas with higher accident or theft rates lead to increased premiums.

● Usage

The nature of the vehicle’s use—such as long-distance travel, transportation of hazardous goods, or heavy loads—impacts premium costs.

● Add-Ons

Coverage for features like zero depreciation, roadside assistance, or loss of income due to vehicle damage can increase premiums.

● Driver’s Experience

Insurers may charge lower premiums for vehicles operated by drivers with a clean record or more experience.

Several crucial factors influence the premium you pay for a third-party coverage plan. Some of them are:

● Engine Capacity

In India, third-party insurance premiums are regulated and based mainly on the vehicle's engine capacity. Higher engine capacity means higher premiums.

● Claim History

A vehicle with a history of third-party claims can lead to higher renewal premiums.

● Vehicle Type

Commercial trucks, buses, and taxis usually attract different rates depending on their risk profile and usage frequency.

● Regulatory Changes

Premiums for third-party insurance are subject to change based on new regulations by insurance authorities.

By assessing these considerations, businesses can correctly decide on the best coverages for their commercial vehicles while working within budgets. Conducting extensive personal research will undoubtedly be crucial when selecting an insurer that can process quick claim settlements.

Before making a decision, consider speaking with agents from various companies and requesting quotes to make a well-informed choice.

(The views, opinions, and claims in this article are solely those of the author’s and do not represent the editorial stance of The Assam Tribune)