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Insurance

Private Vs Commercial Car Insurance: Understanding the Difference

Indian roads have a high prevalence of accidents and result in severe injuries and fatalities every year. Therefore, if you are a car owner in the country, it is important to take some steps to protect your vehicle. One of the easiest ways to ensure that your car is financially protected against unforeseen events is by getting a suitable car insurance policy for it.

An insurance policy for four-wheelers is an effective tool that helps you cover the expenses resulting from any damage to your vehicle. By buying a car insurance policy, you can have adequate coverage for your car and also fulfil the legal requirement of having four-wheeler insurance.

In order to help customers buy car insurance online, several insurers have made car insurance policies available on their official websites. For instance, Tata AIG, one of the leading insurers in the country, offers online car insurance purchase and renewal. You can conduct TATA AIG car insurance renewal in India by directly visiting their website and following a few simple steps.

It is important to choose an insurance policy for your car based on the intended use of the car. In this context, cars are purchased for various reasons like daily travel, business, etc. Therefore, insurers offer commercial and private car insurance separately to help individuals protect their vehicles with suitable coverage.

There are certain differences between private car insurance and commercial car insurance. Let’s look at both types of four-wheeler insurance policies individually.

  1. Private Car Insurance

A private car insurance plan provides insurance coverage for a car used for personal purposes. You can opt for a comprehensive insurance plan that includes own damage insurance as well as third-party liability insurance. If you select a comprehensive private car insurance plan, you get the following benefits:

  • Financial support against the damages or losses due to an accident
  • Financial assistance against damages caused by natural disasters, theft, riots, etc.
  • A Personal Accident cover
  • A third-party liability cover

Here are some things that are not covered in a private car insurance plan:

  • Any damage caused to the vehicle while it is used for a business or a commercial reason
  • No coverage for personal drivers (chauffeurs) if you haven’t included the additional coverage.

  1. Commercial Car Insurance

A commercial vehicle insurance policy covers a car that is used for commercial purposes such as a delivery vehicle or a cab. The insurance coverage under this category is slightly different from private car insurance as it involves other types of risks. Commercial car insurance plans have been designed to ensure the safety of the passengers, drivers, and the vehicle.

Here is the coverage you shall get through a commercial vehicle insurance policy:

  • Financial coverage to protect your business from the losses or damages caused to your commercial vehicle
  • Coverage against a total loss that may happen due to natural disasters, fire, or theft.
  • A Personal Accident cover for the driver and the option to include coverage for passengers
  • A cover against third-party liabilities

Here are some things that are not covered in a commercial vehicle insurance policy:

  • Any damages sustained by the car while being used for personal purposes
  • Wear and tear caused by frequent driving
  • Mechanical or electrical breakdown
  • Damages caused due to events such as war
  • Damages caused to the car while being used by someone other than the owner/driver mentioned in the policy
  • Damages caused due to the usage of the car beyond its capacity

Differences Between a Private Car Insurance and Commercial Vehicle Insurance Policy

  •  Risk and premium:

The risk and premium amount are lower in private car insurance policies as the usage is quite low compared to commercial vehicles. However, they are high in commercial car insurance policies as the usage of the vehicle is quite high.

  • Coverage:

In private car insurance, you get financial protection for the damages or losses due to fire, theft, losses, natural calamities, accidents, etc. On the other hand, in commercial car insurance, you get financial protection against any business losses because of damages to the vehicle.

  •  Mandatory coverage:

With comprehensive private car insurance, you get a third-party liability cover, a standalone damage cover, and personal accident insurance. In commercial car insurance, you get financial protection against third-party liabilities, insurance for the driver and the passengers.

  • Claims process:

In the wake of an accident, filing an FIR is compulsory in private car insurance policies and a prerequisite for an insurance claim. However, in commercial vehicle insurance policies, filing an FIR is not compulsory. You can get the car fixed at a network garage or opt for reimbursement of the repair expenses.

Conclusion

If you are a car owner in India, you must protect your vehicle with a suitable car insurance plan. If your vehicle is used for your personal requirement, you must opt for private car insurance. However, if your vehicle is used for business or commercial purposes, you must opt for a commercial vehicle insurance policy. If you are planning to purchase or renew insurance for your car, you must select a suitable insurance plan.