Commercial Vehicle Insurance: Coverage, Claim & Renewal

Updated: 27-06-2022 13:01:43 PM

Commercial vehicles are used for transportation of goods or passengers or both. Driving a commercial vehicle exposes the driver to continuous and stressful situations which can increase the chance of accidents, loss of goods or even loss of life of the driver or passengers or both. Expenses incurred because of this, if not covered, can cause serious financial and legal implications for the business owner. This is where the need for commercial vehicle Insurance arises that protects the policyholder from bodily injury, death in the event of an accident, and covers you for third-party liability and property damage as well.

What Is Commercial Vehicle Insurance?

It is an insurance policy which covers commercial vehicles against different types of damage along with personal and third-party liabilities. The policy also provides coverage to the policyholder for any legal liabilities following the death, injury, or property damage of third parties arising out of your vehicle use.

Types Of Commercial Vehicle Insurance

1. Comprehensive Commercial Vehicle policy covers the following:

• Loss and damage to the insured
• Third party bodily injury
• Third party vehicle and property damage

2. Third party cover only provides coverage in case of injury, property damage to third-party vehicle. It doesn’t cover the insured for any loss.

What Commercial Vehicle Insurance Covers?

It makes sense to understand the overall coverage provided under commercial vehicle insurance in order to get the best deal. The insurance covers the following:

1. Loss or damage to your vehicle due to:

• Accident
• Burglary, theft
• Fire, explosion, lighting
• Riots, terrorism, strike or malicious act
• Earthquake, flood, storm, landslide
• Malicious act
• Terrorist activity

2. Covers third party insurance which protects you against bodily injury or death to a third party or any damage to that person’s property by use of your insured vehicle

How Commercial Vehicle Insurance Functions?

You should understand and know all the details and policies of the insurance well so that you don’t miss availing any benefit from the plan, when needed. Let us understand how it functions:

• Evaluate your requirement well to understand your need for the sum insured
• Also, analyse the insurance companies and the plans and policies before zeroing in on one plan
• Submit the duly filled in proposal form along with other necessary documents
• In case of any unfortunate event, inform your insurance company regarding details of accident, damage, site of the accident and your policy details. Along with that, also submit the vehicle-related documents and other claim-related documents to the insurance company as per the requirement
• On your intimation, the insurance company deputes a surveyor to ascertain the value of the damage and the payable amount as per the terms and conditions of the policy
• In case of a claim under a third party and accidental death or serious injury, you must file the First Information Report (FIR) with the nearest police station. It is the mandatory requirement for processing the claim related to the third party damage, medical expenses of the injured and compensation for the deceased in the accident
• After due repair work and above process, the insurance company hands over the vehicle to the owner within the stipulated time frame

Eligibility Criteria

In India, almost all kind of vehicles which carry commercial activity to transport the passenger or goods or both, can be covered under the commercial vehicle insurance policy. List of vehicles included in the insurance plan are:

• Bus
• Taxi
• Tractor
• Truck
• Trailer
• Crane
• Other goods and passenger transport vehicles

One can insure his/her vehicle through specialised commercial vehicle policy such as commercial car insurance, bus insurance, truck insurance and taxi insurance.

Claim Process

Some motor insurance companies have cashless claim process while some of them reimburse the claim. Let us look at the two cases:

In case of cashless process

• The insurance company will shift the vehicle to the nearest network workshop for the repair work to be done within the stipulated time frame.
• It will also arrange a cashless medical treatment facility, if the nearby hospital has tied up with the insurance company.

In case of non-cashless process

• In case the cashless process cannot be carried out due to reason beyond the control of the insurance company, the policyholder needs to carry out repair work on their own at the nearest location which can later be reimbursed by the insurance company.
• Make sure to get original bill and payment receipt for all the repair work carried out as it will be required by the insurance company to process the claim.

Documents Required For Claim Process

Below are the important documents which the policyholder needs to submit for getting timely claim:

• Duly filed and signed claim form
• RC of the vehicle along with photocopy
• Driving license of the driver who was driving at the time of accident
• Valid fitness certificate
• FIR in case of third party death or injury or property damage

Exclusions

This insurance takes care of various areas that can put you into trouble. However, certain cases and situations are not covered by commercial vehicle insurance. Let us look at these exclusions:

• General wear and tear, depreciation, electrical faults
• Technical breakdown and damage, which is not accidental in nature
• Damage under “Drink and Drive” situation
• Damage due to overloading the vehicle or its improper use
• Damage caused due to driving the vehicle on incorrect routes, a gross violation of general traffic rules
• Damage due to war, nuclear risks, ionizing radiations
• Consequential loss; if the original damage causes loss or subsequent damage, only the original damage will be covered
• Vehicle driven by someone other than the driver

Renewal Process

One can renew commercial vehicle insurance policy either online or directly by visiting the branch. Most insurance companies provide a No-claim Bonus at renewals provided the policyholder hasn’t made any claim under the policy. One must check the amount of no claim bonus and renewal IDV (Insured Declared Value) before deciding on your policy cover and company.

Companies Offering Commercial Vehicle Insurance In India

Almost all general insurance companies in India provide this insurance. Some of the insurance companies offering commercial vehicle insurance in India are:

• Royal Sundaram
• Reliance General
• TATA AIG
• Iffco Tokio
• HDFC Ergo
• Bajaj Allianz

Important Aspects

One must be aware of all the points related to the insurance and the insurance company in order to understand the plan better and get the best deal. Let us look at some aspects related to the commercial vehicle insurance:

Turn Around Time: The insurance company responds to a claim in a particular duration of time which is called turnaround time. Choose the insurance company which settles claim in the least possible turnaround time.

Claim Settlement Ratio: This ratio signifies the ratio or percentage at which claims will be settled by the insurance company. Even if the premium of the insurance is a little bit higher, you should opt for the company which has a higher claim settlement ratio. There is no point in paying low premiums and then not getting the claim when needed.

Claim Process: When a claim is requested for the commercial vehicle, the insurance company assigns an expert called a surveyor, who assesses the authenticity of the claim, actual damage to the vehicle and determines the fair amount payable in line with the terms and conditions of the insurance policy. While taking insurance policy, you should inquire whether the company has enough trained in-house surveyors as this will result in faster surveys.

Cashless Cover: Some insurance companies provide cashless repair of the vehicle under the claim. However, such a facility is only available at designated workshops of the insurance company. Before finalising the insurance company, you should inquire more about network and coverage of workshops for cashless claims.

Flexibility in Coverage: Based on your requirement, you may need flexibility in coverage and hence can balance yourself with optimum premium payment. For example, for a five-year-old commercial vehicle, you may not want to take own damage insurance but want to cover only third-party liability. In some cases, you want to cover your paid driver under the policy. You must check the flexibility and coverage offered to optimise your premium payment and benefits.

Advantages of Buying Commercial Vehicle Insurance

A commercial vehicle insurance is a must the moment you buy a vehicle. Let us look at some advantages of buying this insurance:

• If you have an entire fleet of vehicles then getting the commercial vehicle insurance will eliminate the stress of managing different insurance policy
• Commercial vehicles have better negotiation ability as they are insured for in bulk

FAQs

Q1. Will an insurance company reduce the premium if I install an anti-theft device?

Almost all insurance companies have the provision to give a rebate in the form of increased No Claim Bonus (NCB) in case the policyholder has installed the anti-theft device. If you own a fleet of several commercial vehicles, you can negotiate with the insurance company for the premium amount based on increased safety features, and other measures taken by you.

Q2. Is it it compulsory to buy a third party insurance?

Yes, according to the motor vehicles act, it is mandatory for a policyholder to buy commercial vehicle third party insurance or liability only policy to avoid any legal trouble. Although it doesn’t provide any benefit to the policyholder’s vehicle , it does give some peace of mind and prevents from legal liabilities and financial losses that may arise out of an accident caused to a third party.

Q3. Should I buy the commercial vehicle insurance policy online or offline?

In case of renewal of your commercial vehicle policy, you have the choice to take online or offline policy. The online mode is generally cheaper and hassle-free. It also offers you multiple payment options and detailed choice of coverage, additional riders and exclusions. However, if you are in confusion regarding proper coverage and IDV of your vehicle, it is advisable to consult good insurance agent and get the policy through him.

Q4. What is the validity period of your insurance policy?

In general, the commercial vehicle insurance policy is issued for one year. However, based on the condition of your vehicle and history, the insurance company may issue the policy for three years if you request for the same. It will be cost effective and will keep you free from the hassles of renewals every year.

Q5. Why is commercial vehicle insurance Needed?

Vehicles like bus, truck, tempo, tow-truck, commercial trailer, are meant for mass transportation not for personal usage. Personal vehicle insurance has limited coverage as it is not applicable if the vehicle is being used for the commercial purpose. Hence, if you intend to use your vehicle for commercial or business purpose, you should take commercial vehicle insurance to protect yourself and the vehicle from unfortunate liabilities.