Commercial Car Insurance Explained- Advantages And Disadvantages

Purchasing insurance is mandatory for any car owner irrespective of its purpose. Owning a car is expensive. Especially when you consider the repair costs in case of any damage sustained due to any accidents. Having a car insurance policy for your car will help you to dodge these expensive bills and be financially secure. 

What Is Commercial Car Insurance For?

Commercial vehicle insurance is a separate motor vehicle insurance policy that basically offers coverage and protection for any car or other vehicle that is not used for personal needs. This policy offers special coverage for the expenses that are incurred from the damages or losses that are incurred while using the car for a commercial purpose. These damages include natural disasters, theft or accidents. It is mandatory for all commercial companies to purchase car insurance policies for their vehicles. 

Advantages of Purchasing Commercial Car Insurance 

If the insured car is used as a taxi, the plan will cover the costs of the medical bills in case of any bodily injury sustained by the passengers caused by any accident. The following are a few advantages of purchasing a commercial car insurance policy -

• Having Many Commercial Vehicles

If you are a company that owns multiple cars, investing in commercial vehicle insurance eliminates the need for you to separately purchase car insurance policies separately. Since commercial car insurance policies are issued in bulk, it will make the claim process easier with a reasonable premium amount. 

• Coverage For Third Party Loss 

With the increase in the number of vehicles on the road, accidents have become extremely common. If you have a commercial insurance policy, you will be protecting yourself from the financial burden to compensate for the loss of the third party in case of an accident. This insurance policy will provide financial assistance to compensate for the loss of the third party.

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• Coverage In Case of Theft 

Theft is a common crime these days. If you own a car that you use for commercial purpose, purchasing a commercial car insurance policy will help you to get a settlement amount in case your car is stolen. The settlement amount will be equal to the IDV of the respective car. 

• Protection In Case of Natural Disaster 

Natural disasters are uncontrollable and unpredictable. They tend to cause severe harm to people and their property. If you have commercial car insurance, you will be provided with a settlement amount if there has been loss or damage to your car in case of any natural disasters like earthquake, flood, etc. 

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• Towing Assistance

Your car is also a machine and it can also face issues. Sometimes, there is a possibility for your car batteries to run out or encounter a mechanical issue in the middle of the journey leaving you stranded. Purchasing a commercial car insurance policy will help you by providing towing assistance to your vehicle in such scenarios. 

Disadvantages of Commercial Car Insurance 

Purchasing car insurance is compulsory for all car owners. However, the policies are specifically categorized for different types of cars to provide the optimal benefits. The following are the drawbacks of a commercial car insurance policy -

1. The policy does not provide any coverage for claims outside the contract like any other policy. 

2. This type of policy will require the policyholder to pay a certain amount of deductibles that will be mentioned in the policy papers. 

3. Does not cover costs incurred to repair any damage caused due to mechanical or electric breakdown. 

4. The insurance company will reject the claim if the vehicle is used outside the insurer-defined geographical location. 

5. The claim will be rejected if the mishap occurs when the car was driven by anyone other than the insured driver or the hired driver which the insurance company should be informed about.

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Also Read:- 5 Most Important Sections In Car Insurance Policy Wordings 

Take Away

According to the Indian Motor Vehicle Act of 2019, it is mandatory for all companies to have a third-party insurance policy. Having commercial car insurance covers third-party liability and keeps you legally safe. Thus, ensure to purchase a commercial car insurance policy.

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.