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Private Car Insurance Vs Commercial Car Insurance

No matter whether it is a personal car or a commercial car, having car insurance is pivotal when it comes to protecting your vehicle from any possible losses or damages. The majority of people only know about comprehensive and third-party liability insurance as the two major types of car insurance policies. However, there are also car insurance policies that are based on the purpose of the vehicle use, i.e., private and commercial car insurance.

Because these two types of cars are used differently, their insurance requirements and coverage differ as well. As a result, various insurance companies offer policies that are tailored to both individual and commercial vehicles. 

In this post, we’ll go through the differences between commercial and private car insurance in detail.

What Is Private Car Insurance?

Private car insurance is a form of motor insurance policy that protects your personal car. This insurance policy will protect you against financial damages caused by an accident, natural disaster, theft, or fire. 

It not only compensates for third-party losses but also compensates the owner in the event of a personal accident. Private car insurance is only for cars that are used for personal purposes. A private car cannot be used for commercial purposes legally.

What Is Commercial Car Insurance?

Commercial car insurance is a type of car insurance policy that protects vehicles that are utilized for commercial purposes. Cabs or taxis that transport people from one point to another for a fee are covered by this type of vehicle insurance. 

A commercial car insurance policy is used to protect commercial cars whose failure or damage could have a detrimental impact on the business of the vehicle owner. Like a private car insurance policy, it covers all vehicle damage as well as third-party legal liability for property damage or injuries/death to third persons.

Difference Between Private Car Insurance & Commercial Car Insurance

ParametersPrivate Car InsuranceCommercial Car Insurance
  • Financial protection against theft, fire, natural disasters, riots, and other misfortunes.
  • The owner-driver is covered for personal accidents.
  • Liabilities owed to third parties are also covered.
  • Offers financial protection against any commercial losses or damages caused by the insured commercial car.
  • Drivers are covered under the policy. If the policyholder wishes, he/she can cover the passengers too.
  • Theft, fire, natural calamities, accidents, and other losses are covered.
  • Third-party liabilities are also covered under the policy.
Risk InvolvedWith a private car, the risk is significantly reduced. The car’s use may not be strenuous. As a result, the insurance premium and deductible are kept low.Commercial vehicles pose a high risk since they travel a greater distance and so have greater risk exposure. As a result, insurance prices and deductibles are affected.
Premium AmountThe premium cost of private car insurance is determined by the cubic capacity of the vehicle, although it is unaffected by the vehicle’s age. Furthermore, the premium rate is lower than that of commercial car insurance.The premium cost of commercial car insurance is determined by the level of risk, the vehicle’s age, and its cubic capacity.
Mandatory CoverThird-party liability.Third-party liability, driver and passenger cover.
Towing Disabled Car Coverage In the case of private car insurance, the damages caused by the insured car while being towed to a garage will not be covered.In the case of a commercial car insurance policy, the damages caused by the insured car while being towed to a garage will be covered.
Personal Accident CoverPrivate car insurance offers Personal Accident Cover (PAC) to the owner-driver.Commercial car insurance offers PAC to passengers as well as drivers.
Claim ProcessThe insurance company must issue an FIR or do an on-the-spot survey/inspection before proceeding with the process.FIR is not required until it is requested. Repair the car at a network garage or receive a reimbursement.
Documents Required During ClaimYou must deposit your registration certificate, driver’s license, FIR copy, and taxation book in order to claim your coverage for a private car.

You must deposit the following documents in order to claim coverage for a commercial vehicle:

  • Registration certificate
  • Driving license
  • Taxation book
  • Permit
  • Load challan
  • Trip sheet
  • Fitness certificate

What Should I Buy- Private OR Commercial Car Insurance?

Whether you should buy private or commercial car insurance, it solely depends on the purpose for which you are using the car. If you are using your car for personal purposes, such as traveling from your home to your office and vice versa, traveling for personal reasons, etc., then private car insurance is sufficient for you. However, if you use your car for transporting goods or driving people from one place to another, then commercial car insurance is a must-have for your car.

Frequently Asked Questions

When compared to commercial car insurance coverage, hired drivers are not insured under private car insurance. Until it is added to the policy as additional coverage, only the owner-driver (policyholder) is covered by personal car insurance.

If the car was driven by someone other than the contracted driver stated in the ‘Driver’s Clause,’ the commercial car insurance policy will not cover any damage or loss.

Only after your car has been lawfully transformed into a private car you can switch your commercial car insurance to private car insurance. You must adhere to the transportation department’s established rules. You’ll need to pay the required costs, have the car inspected, and then register it as a private vehicle at the appropriate Regional Transport Office (RTO).

Commercial vehicle insurance payments cannot be paid in installments. The person purchasing insurance for their business vehicle must pay the entire amount upfront. Otherwise, the insurance provider has the legal right to withhold payments for any dangers posed to the vehicle and its owner.

A standard motor coverage does not cover any damage to the car caused by war, terror attacks, invasion, foreign enemy action, civil war, mutiny, rebellion, conflicts, radiation, or nuclear material/weapons.