Tushar, an auto-rickshaw driver, had taken a commercial vehicle insurance policy. Due to the storm, damages were caused to his auto-rickshaw. He informed the insurance company about the incident. He was hoping that the claim will be initiated quickly.
However, his claim was rejected by the insurance company. The rejection letter mentioned the reason for the claim rejection. The letter stated- The policy covers only third-party liabilities. It does not cover own damages. As a result, the insurance company denied the claim.
Here, Tushar bought a commercial vehicle policy ignoring the fact that the policy bought covers third-party liability only. A third-party liability or liability-only policy does not cover own damages.
There are many cases where customers buy policies without even understanding what type of policy they are purchasing or what are the inclusions and exclusions of the policy. It is the duty of the customer to read the terms and conditions of the policy document before buying it. Also, insurance companies give a 15-day free look period to review their policy and reconsider whether to continue the policy or cancel it.
This blog will help you to understand the inclusions, exclusions, and types of commercial vehicle insurance.
Commercial Vehicle Insurance
A commercial vehicle insurance policy is a type of motor vehicle insurance policy that covers damages/losses caused by or to the commercial vehicle. It is a customized insurance policy that covers fire, accidents, natural calamities, etc.
Is It Mandatory to Buy Commercial Vehicle Insurance?
As per the Motor Vehicle Act, it is mandatory for all business owners to buy at least a liability-only policy for their commercial vehicles. This means that all auto-rickshaws, e-rickshaws, cabs, tractors, trucks, commercial vans, etc., are required by the law to purchase an insurance policy to protect themselves from third-party liabilities caused by their commercial vehicle.
Types of Commercial Vehicle Insurance
There are two types of insurance for commercial vehicles:
Liability-only policy: It protects the policyholder in case an accident occurs and a third party gets injured or dies. It also covers the party property damage.
Comprehensive policy: It covers both third-party liabilities as well as damages to the owner’s commercial vehicle.
Inclusions of Commercial Vehicle Insurance
A commercial vehicle insurance offers:
Part A: Damage/loss to the insured vehicle
A package policy covers loss/damage caused to the insured vehicle arising out of
- Fire, lightning, and explosion
- Riots, strikes, and malicious acts
- Burglary and theft
- Natural calamities like floods, storms, typhoons, earthquakes, etc
- Terrorist activity
- Landslide rockslide
- Other damages as mentioned in the policy document
Note: In case of earthquakes, damages due to fire and shock will be covered.
Part B: Third-party liabilities
The policy will cover the following damages caused by the use of an insured vehicle:
- Death or bodily injury to the third person
- Damage to the property of the third party
Part C: Towing disabled vehicles
The policy covers damages caused by the commercial vehicle (used for the purpose of towing) to the vehicle being towed.
Part D: Personal accident cover
The policy covers the death or injury of the owner-driver caused by an accident of the commercial vehicle provided, the owner-driver should be the registered owner of the vehicle, owner-driver should be the insured in the policy and possess a valid driving license.
Note: In liability-only policy, only Part B is covered.
Exclusions of Commercial Vehicle Insurance
- A deliberate attempt to make a claim
- Policy not active at the time of loss
- Loss incurred due to war, invasion, the act of foreign enemies
- Contractual liabilities are not covered
- Driving without a license
- Consequential damages
- Driving under influence of alcohol or drugs
- Negligence by the owner-driver
- Not using the vehicle in accordance with “limitation as to use” eg. a passenger commercial vehicle used for carrying goods.
- In the case of a liability-only policy, own damages are excluded.
Read the terms and conditions of the policy document carefully as there can be more inclusions and exclusions in your policy.
If you face any problem related to insurance, you can contact Insurance Samadhan. We have helped resolve 14,500+ complaints of policyholders. We’ll be happy to help you.