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  • Difference between a Commercial Car Insurance Vs Private Car Insurance

    Published on December 17, 2019

    Insurance is a tool to cover your financial expenses in case of damage to your car. Your car is important to you because you use it to earn money. Whether it is a private car or a commercial car, your interest needs to be protected as the use of the car may vary and hence the purpose of insurance.

    A commercial car will run more than a private car. And as the commercial cars run more, they are more prone to damage as compared to private cars. Talking about the car insurance, there is a direct relation between the premium and risk exposure. Let us first understand the types of insurance.

    Private Car Insurance


    The Motor Insurance Policy that covers a car you own for personal use is called Private Car Insurance. This Car Insurance policy will cover your financial losses arising due to an accident, theft, natural calamity or fire. It will also reimburse you for third-party losses and personal accident to the owner.

    A Private Car cannot be legally used for any business activity that involves transport of goods or commodities. Such private cars are registered under the category of LMV with the RTO.

    Commercial Car Insurance

     Commercial Car Insurance is about protecting a taxi or cab which is used to transport paying passengers. So damage to a commercial car can bruise the business. When it is about protecting your business, buying insurance policy becomes all the more important. A commercial car will be registered as LPV with the RTO.


    Types of Insurance you can purchase for Private Car or Commercial Car

     You can buy either of the two types of policy:

    1. Third-Party Liability Only Policy: Under this type of car insurance, your expenses will be covered if your car causes damage to someone else or their property. It is a mandatory purchase as per the MV Act.
    2. Comprehensive Policy: In case of Comprehensive Car Insurance, the insurance company will protect you for the losses that may arise out of accidents, theft, fire, natural disasters, personal accident and third-party losses.

    Commercial car insurance vs private car insurance


    Particulars Commercial Car Insurance Private Car Insurance
    Risk Involved The risk involved with the Commercial Car  higher. The number of miles the commercial car runs is more and hence the risk exposure is higher with the Commercial Car. This in turn affects the insurance rate and deductible. While with a Private Car, the risk is comparatively lesser. The use of the car may not be rough. Also, the frequency will be less. This keeps the insurance rate and deductible low.
    Policy cover A Commercial Car Insurance policy offers you financial security if any damage is caused by the towing disabled vehicle by your commercial car. Other than this,the policy offers cover for fire, theft, natural disaster, accident, and personal accident of the driver & TP liability A Private Car Insurance on the other hand, covers you for fire, theft, natural disaster, accident, and personal accident & TP liability
    Mandatory Cover For a Commercial Car, a third-party liability, passenger cover, and paid driver WC cover is mandatory. For a Private Car, only third-party liability cover is mandatory.
    Premium For Commercial Car, the premium rate is different considering the risk involved. The premium rate also depends on the age of vehicle and cubic capacity. For Private Car, the premium rate is comparatively less. The rate is also independent of vehicle age but is dependent on the cubic capacity.
    Third-Party Premium Third-Party Premium rate for commercial car is higher. It is in accordance with the engine capacity. Third-Party Premium rate for private cars is less. It is also in accordance with the engine capacity.
    Claims Deductible Upto 1500 cc = Rs.1500

    Above 2000 cc=Rs.2000

    But if you have opted for Zero Depreciation Cover, then the deductible applicable is Rs.2500/-.

    Less than 1000 cc= Rs.1000

    1000 cc to 1500 cc=Rs.1500.

    Above 1500 cc=Rs.2000

    But if you have opted for Zero Depreciation Cover, then the deductible applicable is Rs.2500/-.

    Claim Documents For claim processing of a commercial car, you need to deposit Registration Certificate, Taxation Book,  Driving License, Fitness Certificate, Permit, Trip Sheet, Load Challan, Copy of FIR. For claim processing of a private car, you would need a Registration Certificate, Driving License, and Taxation Book.
    Claim Procedure If there arises a claim under a Commercial Car Insurance, then it is mandatory for the driver to file an FIR or ask for a spot survey. While in the case of Private Car Insurance, a spot survey is not mandatory. You can get the car back home or take it to the destination and then arrange for survey.