Commercial Car Insurance vs Private Car Insurance

Let’s take a closer look at these two types of insurance and learn how they differ from each other.

What is commercial car insurance?

Commercial car insurance is a type of vehicle insurance policy that protects commercial vehicles, such as taxis, from any financial loss or damage that could arise due to accidents, riots, natural calamities, theft, or fire.

A third-party commercial car insurance policy provides cover against any third-party liabilities. It is mandated by the law for all commercial vehicles that operate within India.

In addition to covering third-party liabilities, a comprehensive commercial car insurance policy, also offers personal accident cover for the owner-driver. Depending on the terms of the policy and the chosen add-ons, comprehensive commercial car insurance can also provide cover for hired drivers and passengers.

Commercial car insurance is meant for cars that are used for commercial purposes such as ferrying of people, goods or commodities in exchange for money.

What is private car insurance?

Private car insurance is a type of vehicle insurance policy that protects your private car from any losses or damages that arise due to accidents, riots, natural calamities, theft, or fire. A comprehensive private car insurance policy covers third-party losses and provides a personal accident cover for the owner-driver of the vehicle apart from providing add-ons that could cover you in case of an accident or damage to your car.

Private car insurance is only designed to protect cars meant for private use. Legally, a private car cannot be used for any commercial activities.

Commercial vs Private Car Insurance - What are the differences?

People usually know more about private car insurance as compared to commercial car insurance since many own private cars. In fact, unless you own a business that operates commercial vehicles, chances are you might not have given commercial car insurance a second thought.

However, if you plan on taking commercial vehicle insurance, it’s best to understand how it differs from private car insurance so that you can customise your policy according to your needs.

Commercial vs Private Car Insurance - Which one should you choose?

When it comes to deciding between commercial and private car insurance, the first thing you need to do is determine the purpose your vehicle will be used for.

If you want to use your vehicle for commercial activities, such as making deliveries, hauling equipment and ferrying passengers, you will need a commercial car insurance policy. A commercial car insurance policy is better designed to protect your business from exposure to many liabilities. For instance, a commercial car insurance policy such as TATA AIG’s Commercial Vehicle Insurance can provide cover for any driver that you hire and provide monetary compensation for losses or damages incurred to your vehicle in the line of business. It also covers any passengers travelling in the vehicle.

On the other hand, if your vehicle is meant for your personal use, then the obvious choice for you is a private car insurance policy such as TATA AIG’s Auto Secure- Private Car Package Policy.

TATA AIG also offers 13 add-ons for all-round protection of your car, including the return to invoice, emergency transport, key replacement, tyre replacement and roadside assistance, among others. Choose from these to make sure you have comprehensive car insurance.

Now that you know what is commercial car insurance and what is private car insurance and how they differ, make sure you #ThinkAhead and get a comprehensive policy to protect yourself, your family and your business.

Related: Why Commercial Vehicle Insurance is Important?

Here’s a look at the major differences between commercial and private car insurance:

Commercial Car Insurance

Coverage Provided: A comprehensive commercial car insurance policy provides personal accident cover to the owner-driver of the commercial vehicle and also covers any third-party liabilities. Optional add-ons can extend the coverage to hired drivers and passengers too. It provides cover from any losses or damages to commercial vehicles due to accidents, riots, natural calamities, theft, or fire.

Premium: For commercial car insurance, the premium is based upon the risks involved, the age of the vehicle and its cubic capacity.

It is generally accepted that the risks involved with commercial cars are greater because they are used very frequently and run for longer distances, making it vulnerable to third-party liabilities. Considering the higher risk factor, the premium rate is usually high too.

Legal requirements: It is mandatory not only to have third-party liability cover but also legal liability cover for the driver as well as a personal accident cover for any passengers in the car.

Documents Required for Claims: The documents required to claim coverage for a commercial car are:
Driving licence, Registration Certificate (RC), Taxation Book, Load Challan, Permit and Trip Sheet (if applicable).

Claim Process: The claim process can only be initiated after an on-spot inspection by the insurance company. In some cases, a First Information Report (FIR) is also mandatory.

Private Car Insurance

Coverage Provided: A comprehensive private car insurance policy provides personal accident cover to the owner-driver of the personal vehicle and also covers any third-party liabilities. It provides cover from any losses or damages to commercial vehicles due to accidents, riots, natural calamities, theft, or fire.

Premium: Since private cars are used less frequently and run for lesser distances than commercial cars, the assumed risk factor is lower. Accordingly, the premium rate is lower.

Legal requirements: It is mandatory for you to have a third-party liability cover as part of the motor insurance policy.

Documents Required for Claims: The documents required to claim coverage for a private car are:
Driving licence, Registration Certificate (RC) and taxation book.

Claim Process: FIR or Inspection of the vehicle by the insurance company is not necessary unless specifically required.