Commercial Motor Insurance (Meaning, Types, and More)

Motor insurance is broadly classified into private motor insurance and commercial motor insurance. Private motor insurance is when an individual takes a motor insurance policy for his personal use. A commercial motor insurance plan is a policy taken with the intention of using the vehicle for commercial use.

A commercial motor insurance policy can be purchased by an individual, organization, or company. Commercial motor insurance is usually purchased by companies, taxi drivers, bus drivers, tourist operators, transportation companies, etc. This content piece will talk about the following important aspects of commercial motor insurance:

1. Meaning of Commercial Motor Insurance
2. Importance of Commercial Motor Insurance
3. Types of Commercial Motor Insurance
4. Commercial Motor Insurance Companies
5. Claims Process

1.) Meaning of Commercial Motor Insurance

A commercial motor insurance policy is simply a motor insurance policy taken for your commercial motor vehicle. The insurance company will indemnify the vehicle owner against any damages. The vehicle owner will provide the insurance company a compensation called a premium in exchange for this indemnification. Let us understand this with the help of a simple example.

Example: Mr. Rajnish is the owner of a transportation company, he has a fleet of ten commercial vehicles. Mr. Rajnish has insured all 10 of his commercial vehicles. Let us further assume that one of his ten vehicles has met with an accident. As he was insured, the insurance company will reimburse Mr. Rajnish for the expenses incurred in repairing his vehicle. This was only possible as he had purchased commercial motor insurance. Had Mr. Rajnish not bought commercial motor insurance, he would have to bear the entire expenses himself.

2.) Importance of Commercial Motor Insurance

Let us talk about some of the importance of purchasing commercial motor insurance.

• Business Stability: A road accident can bring instability to a transport company. The cost of repairs and other third-party expenses can punch a huge dent into a company’s bank balance. Purchasing a comprehensive commercial motor insurance policy can help cushion your company against any such troublesome events and ensure business stability.
• Covers Third-Party Liabilities: A commercial motor insurance policy will protect a business owner against any damages that you or your business may inflict on a third party.
• It is Compulsory: Third-party commercial motor insurance is mandated by the government if you plan to run your commercial motor vehicle on Indian roads. You cannot operate on Indian roads without third-party insurance.
• Cashless Garages: New-age motor insurance companies provide their customers with the benefit of cashless garages. A cashless garage is a garage where you can repair your vehicle and the insurance company will directly handle the billing, you do not need to pay out of pocket initially. This is a highly convenient new feature offered by motor insurance companies in India.

3.) Types of Commercial Motor Insurance

There are two types of commercial motor insurance a business owner can buy. They are third-party commercial motor insurance and comprehensive commercial motor insurance.

• Third-party commercial motor insurance: A third-party commercial motor insurance policy will only provide coverage to third parties. It will not provide direct coverage to the owner/driver. It will also not protect the owner’s vehicle in the event of an accident.
• Comprehensive commercial motor insurance: A comprehensive commercial motor insurance policy will extend coverage not only to the third party but also to the owner and owner’s vehicle. This is a comprehensive policy that covers all important aspects. A person should generally opt for a comprehensive policy over a third-party policy.

4.) Add-on Covers

There are a variety of add-ons that you can purchase along with your commercial vehicle insurance policy. These add-ons increase the customization factor and flexibility of your insurance policy. Some noteworthy add-ons are:

• Engine protection: This addon extends the motor insurance coverage to your vehicle’s engine.
• Key replacement: This addon will provide coverage to you if you lose your vehicle’s key.
• Zero depreciation: This is where the policyholder will not have to bear any depreciation-related expenses. Understand more about zero depreciation cover here
• Roadside assistance: There are times when a driver gets stranded on the road and requires immediate assistance. This addon will cover such contingencies.
• Passenger cover: A passenger cover add-on provides coverage against any loss of life or limb to any passenger traveling in the vehicle.

5.) Motor Insurance Companies in India