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Is insurance important only for bikes and cars running on the road?
The answer is no.
Just like bikes and cars, every vehicle, including the commercial ones, deserves financial protection. This blog will help you to understand everything about commercial vehicle insurance.
It includes vehicles such as trucks, taxis, buses, vans, auto-rickshaws, and delivery vehicles. Due to continuous usage, these vehicles are more likely to face accidents, damage, theft, or third-party liabilities. Commercial vehicle insurance manages such unexpected financial losses. Let's try to understand everything.
What is Commercial Vehicle Insurance?
A commercial vehicle is used for business purposes. Like any other vehicle, it also requires financial and legal coverage to drive on the road. The policy that covers such vehicles is called commercial vehicle insurance.
It is a type of motor insurance that protects against accidents, third-party liabilities, theft, natural disasters, fire, and other unexpected damages faced by commercial vehicles during business operations.
Commercial vehicle insurance covers different types of vehicles, including:
- Trucks
- Buses
- Taxis and cabs
- Auto-rickshaws
- Delivery vans
- School buses
- Goods-carrying vehicles
- Passenger-carrying vehicles
- Agricultural commercial vehicles
- Ambulances
- Pick-up vehicles
Types of Commercial Vehicle Insurance Available in India
Here are the different types of commercial vehicle insurance available to buy in India:
1 Third Party CV Insurance
Third-party commercial vehicle insurance is mandatory in India under the Motor Vehicles Act 1988. It protects the vehicle owner against third-party financial liabilities due to an accident involving the insured commercial vehicle.
It generally covers:
- Third-party injuries or death
- Third-party property damage
- Legal liabilities arising from accidents
2Comprehensive Commercial Vehicle Insurance
This CV insurance provides 360-degree protection to the commercial vehicle while driving on the road. It protects the commercial vehicle against both third-party liabilities and own damages.
Vehicle owners can also add optional add-on covers such as zero depreciation, roadside assistance, engine protection, and return-to-invoice cover for better protection.
3Standalone CV Insurance
Standalone commercial vehicle (CV) insurance is also known as standalone own damage insurance. It covers damages caused to the insured commercial vehicle against accidents, theft, fire, natural disasters, and other causes.
However, this policy does not cover third-party liabilities. Therefore, the vehicle owner must already have a valid third-party commercial vehicle insurance policy to buy standalone CV insurance.
What is Covered Under Commercial Vehicle Insurance?
A comprehensive commercial vehicle insurance policy generally covers:
- Accidental damage
- Third-party property damage or injuries
- Theft of the commercial vehicle
- Fire and explosion damages
- Natural calamities like floods, earthquakes, cyclones, and storms
- Man-made damages such as riots, vandalism, strikes, and terrorism
- Personal accident cover for the owner-driver
- Legal liabilities arising from accidents
- Damages caused during collisions
What is Not Covered Under Commercial Vehicle Insurance?
Commercial vehicle insurance does not include:
- Normal wear and tear
- Mechanical or electrical breakdowns
- Driving without a valid driving licence
- Damage caused by alcohol-influenced driving
- Injuries caused by illegal activities
- Consequential damages
- Using the vehicle for purposes not mentioned in the policy
- Claims arising after policy expiry
- War, nuclear risks, or similar hazardous events
Note: It is always important to read the policy documents carefully to understand the complete list of inclusions and exclusions before purchasing commercial vehicle insurance.
Benefits of Commercial Vehicle Insurance
Commercial vehicle insurance has the following benefits:
- It offers financial protection against accident-related damages.
- Commercial vehicle gets coverage for third-party legal liabilities.
- You will also get protection against theft, fire, floods, and natural disasters.
- It reduces out-of-pocket repair expenses.
- CV insurance acts as legal compliance for commercial road usage.
- Transport businesses get better financial security.
- It supports smoother business operations.
- Optional add-on covers for enhanced protection.
- Peace of mind for vehicle owners.
Documents Required to Buy Commercial Vehicle Insurance
Here are the commonly required documents for commercial vehicle insurance:
- Registration Certificate (RC) of the vehicle
- PAN Card
- Aadhaar Card
- Driving licence
- Previous insurance policy document
- Pollution Under Control (PUC) certificate
- Passport-size photograph, if required
- Business registration documents, in some cases
How to Buy Commercial Vehicle Insurance Online?
Here are the steps to buy commercial vehicle insurance in India:
Step 1: Visit the Website
Go to the official Square Insurance website.
Step 2: Choose Vehicle Type
Select the type of commercial vehicle you want to insure (passenger-carrying vehicle, goods-carrying vehicle, or something other). Then choose your vehicle category.
Step 3: Enter Vehicle Number
Provide your vehicle registration number or choose “Got a New Vehicle.”
Step 4: Fill Vehicle Details
Enter details like model, variant, fuel type, RTO, and registration year.
Step 5: Compare Plans
Compare insurance quotes and choose the coverage you want for your commercial vehicle.
Step 6: Make Payment
Pay the premium online through UPI, net banking, debit card, or credit card.
Calculation of Commercial Vehicle Insurance Premium
Third-party commercial vehicle insurance rates are fixed by IRDAI (Insurance Regulatory and Development Authority of India). Here is the list of different commercial vehicles along with their third-party premiums.
Goods Carrying Commercial Vehicles (Public Carriers Other Than 3-Wheelers)
| GVW Capacity | Premium Amount |
|---|---|
| Not exceeding 7,500 kgs | Rs 15,746 |
| Exceeding 7,500 kgs but not exceeding 12,000 kgs | Rs 26,935 |
| Exceeding 12,000 kgs but not exceeding 20,000 kgs | Rs 33,418 |
| Exceeding 20,000 kgs but not exceeding 40,000 kgs | Rs 43,037 |
| Exceeding 40,000 kgs | Rs 41,561 |
Goods Carrying Commercial Vehicles (Private Carriers Other Than 3-Wheelers)
| GVW Capacity | Premium |
|---|---|
| Not exceeding 7,500 kgs | Rs 8,438 |
| Exceeding 7,500 kgs but not exceeding 12,000 kgs | Rs 17,204 |
| Exceeding 12,000 kgs but not exceeding 20,000 kgs | Rs 10,876 |
| Exceeding 20,000 kgs but not exceeding 40,000 kgs | Rs 17,476 |
| Exceeding 40,000 kgs | Rs 24,825 |
Goods Carrying Motorized Three-Wheelers (Public Carriers)
| Vehicle Type | Premium |
|---|---|
| Except E-carts | Rs 4,092 |
| E-carts | Rs 2,859 |
Goods Carrying Motorized Three-Wheelers (Private Carriers)
| Vehicle Type | Premium |
|---|---|
| Except E-carts | Rs 3,914 |
| E-carts | Rs 3,204 |
Trailer Premium Rates
| Trailer Type | Premium |
|---|---|
| Agricultural Tractors up to 6 HP | Rs 857 |
| Other Miscellaneous & Special Type Vehicles (Per Trailer) | Rs 2,341 |
Note: The premium for standalone own damage and comprehensive commercial vehicle insurance depends on factors like vehicle type, age, IDV, location, usage, claim history, and add-on covers. It is not fixed by IRDAI.
Factors Affecting Commercial Vehicle Insurance Premium
Here are the factors that actually affect the commercial vehicle insurance premium:
1Insured Declared Value (IDV)
What is it?
IDV is the current market value of your commercial vehicle after deducting depreciation.
Impact on Premium
If the vehicle's value is higher, the insurance premium will also be higher because the insurer may have to pay a larger claim.
2Vehicle Usage and Type
What is it?
It refers to the way commercial vehicles are used, such as goods transport, passenger transport, or delivery services.
Impact on Premium
Vehicles that travel more frequently, carry passengers, transport heavy goods, or operate over long distances usually have higher premiums due to higher road risks.
3Engine Capacity (CC)
What is it?
It refers to the engine size and power of the vehicle.
Impact on Premium
Commercial vehicles with bigger engines generally have higher insurance premiums because they may have a greater risk of costly damage or accidents.
4Geographical Location
What is it?
It means the area where the commercial vehicle is mainly used or registered.
Impact on Premium
Vehicles running in crowded cities or accident-prone areas may attract higher premiums due to increased chances of accidents, theft, or damage.
5Driver's Profile and Driving Record
What is it?
It includes the driver's age, experience, and past driving history.
Impact on Premium
If the driver has a clean driving record, the premium remains lower. Frequent accidents or traffic violations can increase the premium amount.
6Claim History (NCB)
What is it?
It shows whether the policyholder has made insurance claims in previous years.
Impact on Premium
Fewer or no claims can help earn a No Claim Bonus (NCB), which reduces the renewal premium. Frequent claims may increase the premium.
7Deductible Amount
What is it?
It is the amount the policyholder agrees to pay from their own pocket during a claim.
Impact on Premium
Choosing a higher deductible can lower the insurance premium, but the vehicle owner will have to pay more during claim settlement.
8Add-On Covers
What is it?
Add-ons are extra coverage options like zero depreciation, roadside assistance, or engine protection.
Impact on Premium
Adding more coverage increases the premium amount because it provides wider protection for the commercial vehicle.
Add-Ons Available in Commercial Vehicle Insurance
Add-ons are extra coverages that you can include in your commercial vehicle insurance policy by paying a little extra premium.
1Zero Depreciation Cover
With this add-on, your claim amount will not be affected by depreciation deduction on various vehicle parts. Also, coverage can still vary slightly between insurers, especially for tyres, tubes, batteries, and consumables.
| Vehicle Parts | Deduction Without Zero Dep Add-On | Deduction With Zero Dep Add-On |
|---|---|---|
| Plastic Parts | 50% | No depreciation deduction |
| Rubber Parts | 50% | Mostly covered |
| Nylon Parts | 50% | Mostly covered |
| Tyres & Tubes | 50% | Covered as per policy terms |
| Batteries | 50% | Covered as per insurer terms |
| Fibreglass Parts | 30% | No depreciation deduction |
| Glass Parts | No depreciation deduction | Fully covered |
| Metal Parts | Based on vehicle age | No or very low deduction |
| Wooden Parts | Based on vehicle age | Better claim settlement |
| Paintwork | 50% | Better coverage with lower deductions |
2Roadside Assistance Cover
Policyholders want to have support that guides them to get out of any adverse situation. With this add-on, you get immediate help for breakdowns, flat tyres, or towing. Commercial vehicles are meant to generate income, and any kind of roadside delays can increase the cost or cause inconvenience.
3Engine Protection Cover
It covers the expenses related to the CV engine. Also, the damages caused by water ingress or oil leakage. For example, if a commercial vehicle gets stuck in a flooded area and water enters the engine, the repair cost can be very high. With this add-on, the insurer covers such repair expenses.
4Return to Invoice Cover
This is an add-on available to compensate the insured for the difference between IDV and the original on-road price. This cover applies only when the commercial vehicle is completely damaged beyond repair or is stolen. It does not cover small damages, minor accidents, or regular repair claims.
5Consumables Cover
This add-on covers small items during vehicle repair after an accident. Consumables generally include:
- Engine oil
- Lubricants
- Nuts and bolts
- Screws
- Brake oil
- Coolant
- Grease
- Filters
- Washer plugs
6Tyre Protection Cover
Tyre Protection Cover is an add-on in commercial vehicle insurance that covers repair or replacement expenses for damaged tyres. Since tyres are one of the most used parts of a commercial vehicle, they can get damaged due to accidents, cuts, bulges, punctures, or poor road conditions.
7No Claim Bonus (NCB) Protection Cover
Your NCB is protected even after you make a claim with this add-on. This add-on generally helps in:
- Protecting your earned NCB discount
- Reducing the impact of small claims on future premiums
- Saving renewal costs in the long run
8Passenger Cover
Passenger Cover is an add-on in commercial vehicle insurance that provides financial protection for passengers travelling in the vehicle. You will get compensation in case a passenger gets injured, disabled, or dies due to an accident involving the insured commercial vehicle.
9EMI Protection Cover
This add-on in commercial vehicle insurance pays the vehicle's loan EMIs if the insured commercial vehicle is under repair after an accident and cannot be used for business operations.
10Hydrostatic Lock Cover
During heavy rainfall, floods, or waterlogged roads, water sometimes enters the engine. The hydrostatic lock cover financially protects against such a situation if damage happens. For example, if a truck gets stuck in a flooded area and water enters the engine, the Hydrostatic Lock Cover can help cover the repair expenses.
11IMT 23 Cover
It protects certain vehicle parts that are usually not fully covered under a standard policy. It mainly covers damage to parts like lamps, tyres, tubes, mudguards, bonnet, side parts, and paintwork caused by an accident.
12IMT-1 Add-on
IMT-1 is an add-on cover in commercial vehicle insurance that provides protection for accessories and electrical fittings fitted in the vehicle but not included in the manufacturer's standard model. It helps cover additional items like music systems, GPS devices, or other electrical accessories in case of damage or loss.
13IMT-27 Add-on
IMT-27 is a commercial vehicle add-on that provides coverage for trailers attached to the insured vehicle. This add-on is useful for transport and goods-carrying vehicles that regularly use trailers for business purposes.
14IMT-5 Add-on
IMT-5 is a commercial vehicle add-on that provides coverage for vehicles used in special business or trade operations. This add-on is useful for commercial vehicles that are used beyond regular transportation purposes under specific policy conditions.
15IMT-7 Add-on
IMT-7 is a commercial vehicle add-on that provides coverage for vehicles carrying hazardous goods. This add-on is useful for transport vehicles involved in carrying chemicals, fuel, gas, or other risky materials for business purposes.
Apart from these, there are some less commonly known but useful add-ons as well, such as:
| Add-On Cover | Brief Explanation |
|---|---|
| Loss of Income Cover | Covers income loss during vehicle repairs. |
| Downtime Protection Cover | Helps during business interruption caused by vehicle downtime. |
| Additional Towing Charges Cover | Covers extra towing expenses. |
| Personal Accident Cover for Paid Driver | Protects the paid driver against accidental injuries or death. |
| Legal Liability to Employees Cover | Covers employee-related legal compensation. |
| Daily Allowance Benefit Cover | Gives a daily allowance while the vehicle is under repair. |
| Special Accessories Cover | Covers additional accessories installed in the vehicle. |
| Fiberglass Fuel Tank Cover | Covers damage to fiberglass fuel tanks. |
Disclaimer: Coverage and claim conditions may vary depending on the insurer and policy terms.
Things to Remember Before Buying Commercial Vehicle Insurance
Here are some of the things to consider before buying commercial vehicle insurance:
- Always choose the policy based on your vehicle usage.
- Do not select a very low IDV just to reduce the premium. A lower IDV can also reduce the claim amount during total loss or theft.
- If your commercial vehicle runs daily for business, add-ons like Zero Depreciation and Engine Protection.
- Cross-check the insurer's claim settlement support and garage network.
- If the vehicle is purchased on loan, you can consider an EMI protection add-on as well.
- Read the inclusions and exclusions carefully.
- Compare premium prices along with coverage benefits instead of choosing the cheapest policy directly.
- Always renew the policy on time.
- The Supreme Court of India has allowed LMV licence holders to drive commercial vehicles with a Gross Vehicle Weight (GVW) of up to 7,500 kg without requiring an additional heavy vehicle licence.
- Delhi has banned the entry of BS3 and BS4 commercial vehicles to control pollution, except for certain CNG and electric vehicles.
- States like West Bengal are enforcing scrappage rules for commercial vehicles older than 15 years.
Conclusion
To conclude, commercial vehicle insurance is very important for anyone having a goods or passenger vehicle. The performance of the business directly depends on the performance of the commercial vehicles used in it. So, it becomes important to avoid delays due to any accident or repair needs.
A suitable commercial vehicle insurance policy not only provides financial protection against damages, theft, and third-party liabilities but also helps businesses continue their operations smoothly.
FAQs
Yes, commercial vehicle insurance is mandatory in India. As per the Motor Vehicles Act, every commercial vehicle must have at least third-party insurance to legally drive on public roads.
Commercial vehicle insurance generally covers damages caused by accidents, fire, theft, natural disasters, and third-party liabilities. Depending on the policy, it may also cover driver, passenger, and vehicle repair expenses.
The premium depends on factors like vehicle type, age, usage, location, IDV, claim history, and add-ons chosen in the policy.
Vehicles used for business purposes require commercial vehicle insurance. This includes trucks, buses, taxis, auto-rickshaws, delivery vans, school buses, and goods-carrying vehicles.
Yes, commercial vehicle insurance can be purchased online easily. You can compare plans, check premiums, choose add-ons, and buy the policy digitally within a few minutes.
Yes, you can easily purchase commercial car insurance online by comparing different plans, checking premiums, selecting add-ons, and completing the process digitally without visiting any branch office.
If the policy expires, the vehicle will no longer have insurance coverage, and driving it on public roads can lead to penalties. Claims made after expiry are also not covered.
Add-ons are optional, but they can provide extra financial protection. Covers like Zero Depreciation, Engine Protection, and Roadside Assistance are especially useful for commercial vehicles used regularly for business purposes.
Yes, comprehensive commercial vehicle insurance generally covers damages caused by natural disasters such as floods, earthquakes, cyclones, storms, and landslides, depending on the policy terms.
Yes, the No Claim Bonus (NCB) can usually be transferred to a new commercial vehicle if the policyholder purchases another vehicle of the same category and follows the insurer’s process.
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