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Is Commercial Vehicle Insurance More Expensive Than Private Car Insurance?

The purpose for which a vehicle is used determines the kind of insurance one must opt to cover it, which in turn determines the premium. If you are looking to use your vehicle to transport passengers or carry goods for commercial purposes you need to buy commercial vehicle insurance. If you are planning to use your vehicle for your own personal use, you need to buy private car insurance. A vehicle meant for commercial use will not have the same insurance cover and premium as a private vehicle as the risk exposure for commercial vehicles is higher compared to private vehicles, for various reasons. We help you understand the differences between private car insurance and commercial vehicle insurance.

 Basis of Difference

Private Car Insurance

Commercial Vehicle Insurance

Scope

Comprehensive private car insurance will cover third-party damage and own-damage for your personal car.

Commercial vehicle insurance will cover the passengers, driver and standard financial cover of damages to the vehicle.

What is covered?

Financial cover against losses, damages due to accidents, fire, theft and natural calamities.

 

Third-party liabilities.

Financial cover against business losses due to damages caused to the insured commercial vehicle.

 

Financial cover against losses due to accidents, fire, theft and natural calamities.

 

Personal accident cover to the driver.

 

Optional cover for passengers.

 

Third-party liabilities.

What is not covered?

Commercial use of the vehicle, passenger cover (available as add-on)

Personal use of the vehicle, regular wear and tear, electrical/mechanical breakdown, damages due to usage beyond its limitations, damages caused by someone driving the insured car other than the driver mentioned in the policy.

Risk Factor

Low risk when compared to a commercial vehicle as the usage of the car is not as frequent as a commercial vehicle.

Higher risk, as the vehicle is used more frequently for commercial activities.

Premium

The premium is determined based on the cubic capacity and the age of the vehicle. The premium rate is less compared to a commercial vehicle.

The premium is determined based on the risk involved, age of the vehicle and cubic capacity. The premium is high compared to a personal vehicle.

Documents Required For Submitting Claim

Registration certificate, Driving license, First Investigation Report (if required), Original repair bill, Cash receipt in case of reimbursement.

Registration certificate,  Fitness certificate, Driving license, First Investigation Report, Load challan, Trip sheet.

Claim Procedure

To make a claim, a survey or an FIR may not be mandatory. You can take your car to a network garage to get it repaired. But the process may vary from insurer to insurer.

To make a claim, First Investigation Report (FIR) is mandatory and a spot survey will be done by your insurer to initiate the claim. But the process may vary from insurer to insurer.

 As the insurance premium for personal cars is comparatively lower, a few vehicle owners purchase private car insurance and use the vehicle for commercial purposes, without considering the legal and other implications. This is strictly against the law and it will invite hefty penalties from the transport authorities. Commercial vehicle insurance is mandatory if you are using your vehicle for commercial purposes. For hassle-free commercial vehicle insurance visit Cholamandalam commercial vehicle insurance.

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