What is Car Insurance for a Private and Commercial Car Different?
Updated On Oct 14, 2023
A private car is different from a commercial one and so are the insurance policies from each. In this article, find out why?
A Car Insurance gives you protection in cases of an unfortunate event. Car insurance does this by providing compensation for damages in case of such an event and hence, brings a certain amount of financial stability even in the face of life’s uncertainties. Moreover, a third party cover has been made compulsory for all vehicles in India. However, not all car insurance policies are the same. A commercial car and a private car have different policies. In this article, we will tell you everything you need to know about the two and how they differ from each other.
What is Defined as a Private Car and a Commercial Car?
Cars that are for individual or personal use rather than for the general public are called private cars. They are free to decide the time and route of travel. A commercial car is one that may belong to a private owner, or the government but is available for use by the public. Moreover, it must follow a prescribed route or a route according to its passengers/ riders. Since a commercial vehicle runs far more than a private one its insurance policies are different. The frequency of use being higher for commercial cars makes them more prone to damage as compared to private cars. Hence, they have separate policies for each.
What is Private Car Insurance?
A personal car can only apply for private car insurance. This will cover liabilities against losses due to theft, fire, natural calamities and accidents. Car insurance is available for both third-party liabilities and own-damage costs in case of a mishap. With a private car you are also not allowed to legally use it for business activities which include transporting goods.
What is Commercial Car Insurance?
Commercial car insurance is available for vehicles that are used as taxis or rentals by passengers. It is essential for such cars to have insurance to protect your business. This type of insurance also has a third-party and comprehensive type of policies.
What are the Differences Between Commercial and Private Car Insurance Policies?
The following are the aspects of Car Insurance that differ in these to categories of vehicles:
Policy Coverage: While insurance for private cars covers own-damage to the vehicle, commercial insurance protects the business of the policyholder in the event of a serious accident.
Premium Rates: The premium rates of commercial car insurance is generally relatively higher due to the higher risks of damage that come from their extensive use.
Documents Required For Claim: commercial insurance requires a Load Challan, Driving Licence, Taxation Book, Copy of Fir, Trip Sheet, Fitness and Registration Certificate. For private insurance, on the other hand, requires a registration certificate, taxation book and driving license only.
In a nutshell, cars are categorised into private and commercial according to their use. A private car is for personal use while a commercial car is available for use to the public. Due to the variations in their use, each has separate types of insurance. Private Car Insurance and Commercial Car Insurance differ in the coverage they provide, the premium rates of the policies and documents used for claims. This is because there are much higher risks involved in commercial vehicles due to their frequency of use.
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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.