Blog

  • Commercial Vehicle Insurance
Commercial Vehicle Insurance

Commercial Vehicle Insurance: All you need to know

It seems the term “Commercial Vehicles” is slightly ambiguous when used in either insurance or tax parlance besides the purposes it serves. Any vehicle which transports goods or passengers for payment is a commercial vehicle, this is a simple definition but that’s not all.

Commercial vehicles are divided into eight classes based on gross vehicle weight (GVW). Classes are also often summarized into categories of Light Duty, Light Medium, Medium, and Heavy-Duty trucks.

Commercial Motor Vehicle (CMV) is a vehicle that is used to transport goods or passengers for the profit of an individual or business. Examples of CMVs include pickup trucks, box trucks, semi-trucks, vans, coaches, buses, taxicabs, trailers, and travel trailers. These also include the vehicles such as work vans, dump trucks, cabs, delivery trucks, staff vehicles, food trucks, and company cars.

“Commercial Vehicle Insurance is a customized motor insurance policy to cover damages and losses caused to or by a commercial vehicle and the respective owner-driver. This could include damages and losses in situations such as accidents, collisions, natural calamities, fires, etc. ”

This way it comprises both: the vehicles bought for business use or any personal vehicles that are being used by the business.

How do you differentiate between a commercial vehicle and a private vehicle?

  • A private vehicle is owned privately, but is being used for commercial purpose as well. This way a commercial car is subject to higher exposure to risk as it is used more than a private car, which is used for private purpose only. The vehicle will be used repeatedly to carry out commercial activities, which makes it vulnerable to accidents and third-party liabilities.

Is commercial vehicle insurance mandatory?

  • In India, as per the Motor Vehicles Act, all vehicles that operate in any public space must have a motor vehicle insurance cover. Policyholders must have at least 'third-party liability motor insurance coverage even when opting for the basic insurance plans.

What type of insurance is mandatory?

Compulsory insurance is insurance that must be legally owned to do an activity, such as auto insurance and driving a car. Other types of compulsory insurance include workers' compensation and professional liability insurance. Here, the insurance ensures liability and collision coverage.

Vehicles primarily used for carrying goods to transport from one place to another are known as goods-carrying vehicles and mostly include mini trucks, trucks, tempos, lorries, etc. Since these vehicles are large, they carry more risk. Commercial vehicle insurance covers the damages to the third-party vehicle or own vehicle and the damages to the goods as per the policy coverage.

There are many types of vehicles used for business or commercial reasons besides trucks, taxis, buses, cabs, etc. The vehicles may include special vehicles used for mining, farming, construction, etc. Commercial vehicle insurance shields the insured vehicle from any mishaps and losses caused to and by the vehicle and its perspective driver.

Commercial Vehicle Insurance is a customized motor insurance policy to cover damages and losses caused to or by a commercial vehicle and the respective owner-driver. This could include damages and losses in situations such as accidents, collisions, natural calamities, fires, etc.

Though the commercial vehicle is quite comprehensive because the risks involved are quite high, still it varies from vehicle to vehicle depending on its nature, purpose, and classification.

Certain aspects are not covered like: Depreciation in the value of the goods-carrying vehicle over time, any electrical or mechanical breakdowns remaining uncovered, and goods-carrying vehicle insurance that goes out of action if you do not possess a valid driving license. Driving under the influence of drugs/alcohol remains out of car insurance coverage scope.

Hence, every commercial vehicle owner must understand and take proper insurance coverage so that any calamity doesn’t pose a threat. As it is a two-pronged insurance coverage where vehicle and goods both are covered, you need to have clarity on both aspects. It’s advisable to consult a trusted Insurance advisor/broker who decodes it properly for you.

Category

Tags