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Do I Need to Get My Commercial Cars Insured?

Wish

Written by Sharad Bajaj

Updated Oct 13, 2023

As per the Indian Motor Tariff, every commercial car is compulsorily required to have an insurance cover.

A cab ownership business generally works with two types of models. While some cab companies earn profit by dividing earned fares with their hired drives, others make money by leasing their vehicles to the drivers, whose earnings depend on how much fares they earn. Whatever the model be, one of the most important responsibilities of a cab service provider is to get all the company cabs insured.

A commercial cab can be insured with a commercial car insurance policy. There are two types of commercial car insurance policies - Third Party Insurance Policy and Comprehensive Insurance Policy. Let’s explore both two types of plans in detail.

Third-Party Insurance Policy For Commercial Cars

According to the Indian Motor Tariff, 2002, a third-party car insurance policy is mandatory for all car owners. Under this policy, an insurance company is liable to give coverage for the losses caused to a third party for bodily injury, death and property damage by the insured’s cab. Commercial cab owners or drivers are required to keep the policy document with them at all times.

Coverage of Third Party Insurance Policy For Commercial Cars

  • Third-party property damage is covered up to Rs. 7.5 lakh.
  • Bodily injury/death of a third party.
  • Permanent as well as total disabilities incurred by a third person.
  • Optional personal accident cover of up to Rs. 15 lakh.

A third party/liability only insurance coverage can also be modified as a Split Policy as per the requirements of the policyholder. In the case of an accident, the split policy can define the amount to be paid for the coverage - all person’s coverage, each person’s coverage and property damage coverage.

Comprehensive Insurance Policy For Commercial Cars

In a cab ownership business insuring the driver and the cab is equally important as ensuring third-party liabilities. Thus, we need to go beyond a third party/liability only policy. Such requirements can be fulfilled with a fully comprehensive car insurance policy. Let’s dig into the aspects, the plan offers.

Coverage of Comprehensive Insurance Policy For Commercial Cars

1. Own damage suffered by the insured’s cab in the following scenarios:

  • Road accidents
  • Fire explosion, self-ignition or lightning
  • Burglary, housebreaking, or theft
  • Riot and strike
  • Natural Calamities
  • Terrorist activity
  • Malicious act

2. Third party property damage is covered up to Rs. 7.5 lakh.

3. Bodily injury/death of a third party.

4. Permanent as well as total disabilities incurred by a third person.

5. Optional personal accident cover of up to Rs. 15 lakh.

What All is Not Covered Under Comprehensive Insurance Policy For Commercial Cars?

The following are not covered under a comprehensive car insurance policy:

  • Mechanical or electrical breakdown
  • Consequential loss
  • Depreciation i.e. wear and tear
  • Damages incurred due to drink and drive

The Depreciation Cost Applicable On Different Car And Its Parts

Part of the car

Depreciation%

All rubber/nylon/plastic parts, tyres, tubes, air bags, batteries

50%

All fibre glass components

30%

All metal parts

0%

Age of the car

Depreciation%

Up to six months

0%

Six months to one year

5%

One year to two years

10%

Two years to three years

15%

Three years to four years

25%

Four years to five years

35%

Five years to ten years

40%

More than ten years

50%

Conclusion

For an individual or a car ownership businessman, it is necessary to compare several quotes before buying a car insurance policy. Proper research and comparison of the components, as well as the add-ons, will help to find a suitable option that will fulfill all the requirements. It is also suggested to look for an individual insurance agent who will give you the best option.

For further reading:

Best Car Insurance Policy for People in Their 30s

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.

Wish

Written by Sharad Bajaj

Sharad is an insurance industry veteran who has managed motor insurance products for over a decade. Read More

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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