Importance of commercial vehicle insurance

Commercial vehicle insurance policy offers protection against losses and damages incurred by insured vehicle, its owner-driver, or both.

Insuring commercial vehicles with the best insurance reduces risks and provides financial coverage for unfortunate mishaps. Photo credit: Pixabay

Commercial vehicles can serve as a source of livelihood for many, whether used for the transporting of goods or ferrying passengers. Any loss or damage to a commercial vehicle can result in financial setbacks that may impact business operations. That’s where commercial vehicle insurance comes in, providing financial protection against such losses.

Commercial vehicle segment covers a wide range of vehicles, including goods-carrying vehicles, passenger-carrying vehicles, and special types of vehicles used for specific purposes. Examples of each category are listed below:

· Goods Carrying Vehicles

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Vehicles that are primarily used to transfer goods from one location to another fall under the Goods Carrying Vehicle (GCV) insurance category. It includes trucks, tempos, lorries, vans etc.

· Passenger Vehicles

This category includes taxis, school buses, private buses auto-rickshaws, among many others that generally can be used for transportation of at least one or more passengers for hire or reward.

· Special Types of Vehicles

There are numerous other commercial vehicles that are frequently used for and by businesses. These are vehicles that are used for specific usage like cranes, ambulance, hearses or excavators etc.

Commercial vehicle insurance policy offers protection against losses and damages incurred by insured vehicle, its owner-driver, or both. Insuring these vehicles with the best commercial vehicle insurance is a wise choice, as it reduces risks and provides financial coverage for unfortunate mishaps.

For complete financial protection, it is recommended to opt for comprehensive insurance policy that covers loss or damage to the vehicle. Whilst Third party liability insurance (which is mandatory by law) provides coverage against liabilities arising from death or bodily injuries or third-party property damage, comprehensive insurance covers the vehicle against losses due to fire, burglary or theft, natural calamities, manmade disasters like riot, terrorism and the like. A host of add-on covers are available to enhance protection and widen the coverage.

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There are multiple factors an insurance provider looks for when offering Commercial Vehicle Insurance. Listed below are a few of them:

· Location or Registration Zone – One of the key elements that an insurance company considers is the location of the insurance buyer and where the vehicle is registered.

· Gross vehicle weight of trucks is critical factor for pricing in goods carrying vehicles. Similarly, in passenger carrying vehicles it would be number of passengers which can be officially carried in a vehicle.

· Vehicle age is also a critical factor, as older vehicles may be used less frequently than new vehicles. New vehicles may be used more frequently, leading to a situation wherein there may be more propensity for loss and probability of accidents.

It is important to understand that any kind of financial emergency can disrupt your financial health. By purchasing commercial vehicle insurance, you can secure each commercial journey and run your business smoothly.

The author of this article is S. Vishwanathan, Head- Underwriting, SBI General Insurance. Views expressed are his own.

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