Buying a vehicle requires years of savings and a well-planned budget to maintain it in the future. Whether you are purchasing a private car or a commercial one, a vehicle insurance policy is crucial to safeguard your automobile from possible damage or losses. In India, both private and commercial vehicle insurance is available, and you can buy the one that suits your requirements.
Keep on reading to understand what these two types of vehicle insurance plans are and what are the major differences between them.
What is Private Vehicle Insurance?
As the name suggests, private vehicle insurance provides financial coverage for your vehicle for private use. This type of insurance is of two types – comprehensive vehicle insurance and third-party vehicle insurance.
While the former provides financial protection against damages to a third party as well as you and your vehicle, the latter only provides cover against the damages caused to a third party.
Below are the key features of a comprehensive private vehicle insurance plan:
Provides coverage for personal accidents of the policyholder
- Provides coverage against losses and damages caused by an accident
- Provides coverage against third-party liabilities
- Provides coverage against natural calamities, theft, riots, and fire
What is Commercial Vehicle Insurance?
Commercial vehicle insurance policy provides coverage for vehicles registered for use under commercial purposes. Examples of commercial vehicles include cabs and taxis. Generally, the premiums for commercial vehicle insurance are higher as compared to private vehicles. This is because commercial vehicles are at a higher risk of getting into accidents and suffering damages as compared to private vehicles.
Key features of a commercial vehicle insurance plan are:
- Provides personal accident coverage for drivers and in some cases also has the option to cover passengers
- Provides cover against total loss in cases of fire, theft, or other natural disasters
- Provides financial protection to the vehicle owner or the business owner of the policyholder in case of damage or loss to his/her commercial vehicle
Difference Between Commercial & Private Vehicle Insurance
| Features | Commercial Vehicle Insurance | Private Vehicle Insurance |
| Exposure to Risk and Premium | Risk factor is high and the premium is also higher as compared to private vehicle insurance. | Risk factor is low and the premium is also lower as compared to commercial vehicle insurance. |
| Coverage | Offers financial protection to owner-driver of the insured commercial vehicle in case of damages or losses due to accidents, fire, natural calamities, accidents, etc. Also covers third-party liabilities | Offers financial security in case of damages caused by accidents, fire, natural calamities, etc. Also offers personal accident cover for the owner-driver. Covers third-party liabilities |
| Legality | Mandatory to have Third-party liability, Driver, and Passenger Cover | It is mandatory in India to have at least third-party insurance cover |
| Claim Process | Unless required, FIR is not mandatory. Get a reimbursement after the repair work or get the vehicle repaired at the network workshop. | FIR is mandatory or on-the-spot inspection by the insurance provider is done. Once this is cleared the claim process is initiated |
| Documents Required for Claim Process | Vehicle fitness Certification, Registration Certification, Load Challan, Driving License, FIR if required, License Permit, Copy of Insurance Policy and Taxation Book | Vehicle Registration Certificate, FIR, Driving License, Copy of Insurance Policy, original bills of repair, cash receipts in case of reimbursement |
Which is Better: Commercial Vehicle Insurance or Private Insurance Vehicle?
Understanding your needs and requirements is necessary when comparing commercial vehicle insurance and private car insurance. Are you planning to use your vehicle for business purposes such as a taxi or are you going to use it only for personal purposes? The choice between the two depends totally on your needs and the purpose for which the vehicle is used.
You also need to remember that using a private car for commercial purposes to earn money is a legal offence and can invite stipulated penalties by the transport authority of India. This is why commercial vehicle insurance should be purchased when the vehicle is intended to be used for business purposes, and for your personal vehicle or car, private vehicle insurance would suffice.
Conclusion
Before you make your final choice, you should compare different insurance policies. Carefully, consider your requirements and budget to ensure that you receive financial security as well as comprehensive protection from your insurance policy. Once you understand the important features of both commercial vehicle insurance and private vehicle insurance, you can make informed choices that align with your priorities.
