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Difference Between Private and Commercial Car Insurance

Published On May 09, 2021 10:00 AM By InsuranceDekho

People purchase cars for a variety of purposes. Some people purchase it as a luxury or a status mark, while others purchase it to make their every day commute to work easier. A car is purchased by many people to aid their commercial or business activities. Whatever the justification for purchasing a vehicle, a car insurance policy must protect it. After all, you paid a lot of money for it, and you don't want it to get damaged or lost in an accident.

A car insurance policy protects your car from damage or loss caused by an accident, natural disasters, man-made disasters, or fire. It also covers the owner's personal accident and any third-party liabilities that you may be liable for.

Difference Between Private and Commercial Car Insurance

Difference Between Private and Commercial Car Insurance

When purchasing Insurance for your car, you must be informed of the form or car insurance suitable for your requirements. Most people know of comprehensive and third-party liability insurance as the two forms of car insurance schemes sold by motor insurers in India. According to coverage, there are two types of car insurance plans. However, based on the purpose of vehicle use, India offers two types of car insurance plans. There are two types of car insurance: private and commercial. Please provide us with more information on both of these car insurance plans.

What Is Private Car Insurance?

A car insurance policy intended to cover vehicles used for personal purposes is known as private car insurance. It is an insurance policy for vehicles that may not be used for commercial or business purposes, such as moving goods or persons from one location to another. A private car insurance policy covers third-party liability and any loss or harm to the vehicle caused by fire, robbery, floods, or earthquakes. Accidents, strikes, and protests, to name a few. It also includes personal injury coverage for the vehicle's owner-driver.

What is Commercial Car Insurance?

Commercial car insurance is a type of car insurance that covers vehicles that are used for business purposes. It is used to cover commercial vehicles whose failure or damage may have a negative impact on the car owner's company. This form of vehicle insurance is given to cabs or taxis that transport people from one location to another in return for money. A commercial car insurance policy, like private car insurance, protects all own-damage to the vehicle and third-party legal liability resulting from causing property damage or accidental injuries/death to third parties. Aside from providing personal injury insurance for the owner,

You may also like to read:- Important Things You Should Know About Car Insurance

What's the Difference Between Private and Commercial?

The distinction between private and commercial car insurance seems to be straightforward. There are, however, more distinctions between the two than meets the eye. Take a look at the table below to see how private car insurance varies from commercial car insurance:

Private Insurance

Commercial Insurance

A private car is less vulnerable to danger than a commercial vehicle. Since a private vehicle is used less often, the risks of an accident or liability are reduced. As a result, private car insurance premiums are kept low.

Since commercial vehicles are used more often than private vehicles, they are more vulnerable to risk. Since the vehicle will be used for commercial purposes on a regular basis, it will be subject to incidents and third-party liability. As a result, the cost of a private car insurance policy rises.

In the case of a private vehicle, the driver must have third-party liability coverage under his or her four-wheeler insurance policy.

In the case of a commercial vehicle, the owner must have third-party liability insurance, civil liability insurance for hired drivers, and personal injury insurance for the vehicle's occupants as part of his or her motor insurance policy.

In the event of a fatal accident resulting in injury or death, private car insurance pays PAC to the owner-driver of the private car.

Passengers and drivers who are paid to drive the vehicle are covered by commercial car insurance. It shields the car's owner from any civil liability resulting from passengers or contracted drivers who are involved in an accident.

Any accidents incurred by the insured vehicle when it was being towed to a garage are not covered by private car insurance.

Any loss or damage incurred by a damaged insured car being towed to the garage is covered by commercial car insurance.

A private car insurance policy's premium is usually higher because it carries a higher risk factor due to the fact that it is used more often.

A commercial car insurance policy has a lower premium since a private car is used less often and thus has a lower risk factor.

A spot survey of the vehicle or a FIR may not be required in order to file a private car insurance claim. However, the specific claim process can differ from one insurer to the next.

To make a commercial car insurance claim, you will be required to file a police report and have your insurer conduct a spot survey. However, the process for filing a claim can differ from one insurance policy to the next.

You will be asked to apply your vehicle's registration certificate (RC), your driver's licence, and your tax records to the car insurance provider when filing a claim under your private car insurance policy.

You will be asked to apply your vehicle permit, load challan, trip sheet, fitness certificate, copy of FIR, along with your car's RC, driving licence, and tax records to the insurer when filing a claim under a commercial car insurance policy.

Also Read

Why Should You Opt for A Comprehensive Car Insurance Policy?


The main distinction between a commercial and a private car insurance policy is that the former is tailored for commercial vehicles, while the latter is for personal vehicles. While there are some distinctions between these two types of insurance plans, the reason for which you use your car determines the type of four-wheeler insurance policy you need.

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.


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