At end of year 2017 the Indian automobile industry stood at rank fourth globally in terms of its size. The demand and supply of products and services both increasing at an unprecedented scale in a developing country like ours will further need efficient transportation and the automobile industry needs to address this challenge.
In fulfilling this challenge the size of the Indian automobile industry is set to grow in the coming years. Keeping the above growth factors in mind, commercial vehicles become a very important segment. In the year 2019 alone, ten lakh units of commercial vehicle got sold in our country. The projected compounded annual growth rate of commercial vehicle sales in India is estimated to be around 14% in next coming years.
We have mainly three types of motor insurance policies available in India. First of them is a two wheeler package policy in which we can get our private motor bikes and scooters covered. Second is a car package policy which covers private owned four wheelers.
Third is a commercial vehicle package policy which can be used for vehicles operating for business purposes like motorized three wheelers like auto rickshaws, taxis i.e. cars which are on tourist permits and goods carrying and passenger carrying vehicles like trucks and buses. Below mentioned are some points which highlight the importance of commercial vehicle insurance policies.
- With the commercial vehicle segment growing the demand and importance of commercial vehicle insurance will proportionately grow in coming time.
- With cab companies flourishing and the growing number of taxis in the roads of India need this type of motor insurance to get covered.
- As commercial vehicles are used for business purposes any damage to vehicle either due to an accident or natural calamity need immediate repair to avert business loss. Any expense incurred on the vehicle is a business expense which can be taken care of by taking an insurance policy.
- Commercial vehicle often plies on longer routes and are subject to harsh conditions which increases the insurance need of the vehicle.
- Accidents involving large goods carrying and passenger carrying vehicles are of greater magnitude thus liability to third parties on account of bodily injury or property damage can be of higher amounts. Adequate insurance is necessary to cover this.
- Owners have liability towards paid drivers, helpers and cleaners. Passenger carrying vehicles have huge liability towards passengers.
- Although all types of vehicles running on Indian roads are mandated to carry an in force third party liability policy. This is viewed more strictly for commercial vehicle on account of larger liabilities involved.
As far as wordings and the terms and exclusions of different types of motor policies are concerned, they are similar. All of the types of motor policies cover the same named risks like damage by accidental external means, natural perils, Fire, Theft, Riot strike or malicious damage.
Also all exclusions like geographical area, limitations as to use, consequential losses etc. used in motor policy for one segment applies to commercial vehicle segment as well and there is no change in wordings and terms. Although Depreciation slabs, rule of fixing IDV, No claim bonus rules are also generally the same across policies for different vehicle segments.
The greatest difference lies in pricing and premium, commercial vehicles are rated as a separate class altogether in India motor tariff. The third party rates are mandated by the regulator which stipulates higher liability premium for larger commercial vehicles. Own damage rates depend on the gross vehicle weight and passenger carrying capacity of the vehicle.
There are some endorsements defined in the India motor tariff which are applicable for only particular segment of vehicles. Some endorsements applicable only to commercial vehicles are named here, which a purchaser of commercial vehicle insurance would like to look at:
IMT 14 Use of vehicle confined to sites
IMT 21 Special exclusions and compulsory deductible
IMT 23 Cover for lamps, tyres, tubes etc.
IMT 34 is used for use of commercial type vehicles for both commercial and private purposes
IMT 37 Legal liability to non-fare paying passengers
IMT 38 Legal liability to fare paying passengers
IMT 39 Legal liability for persons employed in connection with loading and unloading
IMT 40 Legal liability to paid driver, conductor or cleaner
IMT 42 for Private carrier
It is to be noted that all the additional covers available for private cars and two wheelers are not available for commercial vehicle segment but most of them are. Additional covers like engine protector, NCB protector, Invoice value protection, nil depreciation, Roadside assistance, accessories cover, towing cover, revenue loss protection cover can be extremely helpful for commercial vehicles as well.
Again the wordings of terms and coverage and exclusions will be similar to that of a private car or two-wheeler add on with but for commercial vehicles there will a change in price.
If you own a number of commercial vehicles instead of managing different policies for each vehicle a single policy covering the whole fleet of vehicles can be obtained. This is easier to manage and may offer some premium discounts as well. While purchasing commercial vehicle insurance we need to look at the similar aspects as we do while purchasing a private car or two-wheeler policy.
Some of these are network garages specifically in the area or route at which our commercial vehicle ply in, claim settlement ratios for insurers, customer support etc. Some insurers offer door step pick up and drop of insured vehicle in case of an accident, opting for such service may be helpful for the policyholder.