You might have invested in vehicles be it a cab, a mini-truck, or a school bus to generate income for yourself. These vehicles become important revenue-generating assets for you.
Like any other revenue-generating asset, you need to financially protect these vehicles to avoid business disruption due to any kind of accidental damage or liability due to damage of any third party person or property on the road.
What’s more, you are legally required to buy an insurance cover for your vehicle. If you don’t own one, you can face legal repercussions like fines, etc.
In this article, we’ll discuss what insurance for commercial vehicles is and how it works.
Let’s First Discuss What is A Commercial Vehicle?
A vehicle that is used for commercial purposes to transport either goods or passengers is called a commercial vehicle. It is a vehicle meant for business purposes and weighs 3.5 tonnes or more.
Examples: Cabs, taxis, trucks, lorries, auto-rickshaws, school buses, cranes, etc.
What is Insurance for Commercial Vehicles?
Insurance for commercial vehicles is similar to any standard vehicle insurance policy. The insurance policy promises financial coverage for any losses or damages caused to the vehicle due to accidents, fires, calamities, etc. Buying insurance for a commercial vehicle can help you manage any financial losses arising due to such incidents.
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Why Should You Buy Insurance for Commercial Vehicles?
Here are 3 important reasons behind buying insurance for commercial vehicles -
1
To Protect Yourself From Damage And Financial Liabilities
A commercial vehicle is part of your business family. It is always on the road, sometimes even for 24 hours. Its frequency of travel is higher than private vehicles, which in turn, exposes it to a greater risk of damage. Any damage to a commercial vehicle puts the vehicle off-road, thus having an impact also on the business and its revenues. It is hence important to cover commercial vehicles with insurance, It financially covers your business against any losses due to major damage to your vehicle.
2
To Protect Your Business From Any Third-Party Liabilities.
Commercial vehicles run for long hours and across different kinds of routes, areas, and cities. These vehicles are often driven by paid drivers who may cause injury to someone on the road, or ram the vehicle to an expensive property/asset. As per law, your business will be liable to pay damages for injury or damage based on liability awarded by the court of law. Such losses may severely affect your business and its profitability. Through third-party insurance, you are covered for unlimited liability on death/injuries and liability up to Rs. 7.5 lakhs in case of damage to property.
3
A Third-Party Insurance Cover is Legally Mandatory
Besides the liability explained above, It is also compulsory under the law that every vehicle (be it commercial or private) on the road must have at least third-party insurance. If you don’t comply with these rules, you can face legal repercussions like fines, etc. that again be an unnecessary loss for your business.
Types of Plans for Commercial Vehicles
Commercial vehicles and the policies available can be of various types. Let’s see.
Insurance For Passenger Carrying Vehicles
Passenger carrying vehicles are intended to carry one or more passengers and include cabs, taxis, private buses, school buses, auto-rickshaws, etc. It is important to get such vehicles insured because they have a huge responsibility towards the passengers and the coverage will safeguard them against any unfortunate circumstances.
Insurance For Goods Carrying Vehicles
Goods carrying vehicles, as the name suggests, are used for the purpose of transporting various goods from one place to another. They include lorries, trucks, tempos, etc.
Given their large size, they are prone to higher risks. Buying insurance for a goods carrying vehicle not only safeguards the third party from loss or damage but also protects the owner-driver and the vehicle from natural calamities and ill-fated situations.
This insurance is a must-have for businesses that regularly use such vehicles to transport goods.
Insurance for Miscellaneous And Special Vehicles
All vehicles that are used for commercial purposes, other than the ones listed above, are classified under miscellaneous and special vehicles. They include vehicles used for farming, construction, mining, etc.
An insurance policy for such vehicles will -
Provide financial coverage for losses caused by and to the vehicle.
Protect the owner-driver against unfortunate circumstances.
What is covered in Commercial Vehicle Insurance?
Insurance for commercial vehicles will protect the insured person against any damages or losses caused by -
Fire accidents like explosions, self-ignition, or lighting
Strikes and riots
Theft
Natural calamities like earthquakes, floods, storms, hurricanes, inundation cyclones, typhoons, hailstorms, landslides, rockslides, etc.
Accidents
Malicious acts
Terrorist activities
Road, rail, inland waterway, elevator, or air transit
Example : Kamal, the owner of an auto-rickshaw, has parked his auto-rickshaw in front of a factory. There was a huge strike by the factory workers and they damaged all the vehicles parked near the factory by breaking their handles, windows, wipers, windshields, etc. Kamal’s auto-rickshaw got damaged too. But, since he owns an insurance policy for his commercial vehicle, the repair cost of the same will be covered by it.
What is Not covered in Commercial Vehicle Insurance?
Insurance for commercial vehicles doesn’t cover loss or damage caused by
Depreciation
Wear and tear
Consequential losses
Failures or breakages
Mechanical or electrical breakdown
Damages to accessories by burglary
Damages caused due to overloading or strain of the commercial vehicle
Accidents or damages caused to the vehicle under the influence of alcohol or drugs
Any damages caused to the tyres or tubes unless the vehicle insured is damaged at the same time. In this case. the liability of the company shall be limited to 50% of the replacement cost.
Example : Rohit, a taxi driver, hit an electric pole when driving his taxi late at night. This caused significant damage to the bonnet, headlights, and windshield. He made a claim under his insurance plan, but it was discovered that he has been under the influence of alcohol when the incident happened. Hence, his claim was rejected and he received no compensation for the repair costs.
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Benefits of Commercial Vehicle Insurance
Here is why owning insurance for commercial vehicles is beneficial -
It gives you protection against any financial losses caused by an unforeseen situation. For example, if your vehicle is covered under comprehensive insurance, and is completely damaged in the floods, you can make a claim under your insurance plan and be worry-free.
As mentioned earlier, it covers any damage caused to a third-party person or property. And since a third-party cover is mandated by law, you will be protected against any legal repercussions too.
Can You Buy Insurance for Commercial Vehicles Online?
Yes! You can purchase insurance for commercial vehicles online by following these simple steps -
Visit the website of your preferred insurance provider, broker, or web aggregator.
Select whether your vehicle is Goods Carrying Vehicle or a Passenger Carrying Vehicle.
Fill in vehicle details like the make, model, registration number, RTO details, etc.
After you submit the details, you will be directed to the quotation page. You can select your desired value for the vehicle and proceed to the payment page.
Then, make the payment to confirm your policy purchase. Make sure you crosscheck all the details entered by you.
Once you make the payment, you will receive the policy document. Confirm whether all your details are correct and that the policy explicitly states that it is for commercial vehicles.
Note: The application process online may vary from insurer to insurer.
Insurance Premiums for Commerical Vehicles
Here’s a table that demonstrates how insurance premiums vary across different commercial vehicle types -
Vehicle type
The capacity of the vehicle
TP premium rates
Passenger Carrying Four Wheelers (Up to 6 passengers)
For your money-earning wheels, commercial car insurance is more than simply another coverage; it's a shield full of vital protection:
Comprehensive Coverage: Protections against third-party liabilities as well as damage to one's own vehicle from theft, fire, accidents, and natural catastrophes.
Third-Party Liability: As required by law, this covers the demise of the victim, physical injury (unlimited), or property damage (up to Rs. 7.5 lakh).
Mandatory Personal Accident Coverage: Even with third-party-only plans, this covers the driver's or owner's financial protection in the event of an injury or death.
Add-ons & Extras: Many insurance policies provide customisable extensions, ranging from extended legal liability, depreciation waiver, and bi-fuel kit protection to nil-depreciation and towing benefits.
A well-thought-out safety net for commercial vehicles is more important than simply checking off regulatory requirements.
Why Do You Need a Commercial Vehicle Insurance Policy?
Let's face it, your car is an income generator. Here's why you shouldn't leave it uninsured.
Legal Requirement: Third-party insurance is a minimum requirement under the Motor Vehicles Act. Driving without it? Fines and even more serious consequences.
Financial Safety Net: Relying solely on savings might be risky, regardless of whether they are damage to your own car or a third party's loss.
High-Risk On-Road Use: Commercial vehicles travel longer distances and use higher-risk routes, which significantly increases the likelihood of accidents.
Unpredictable Hazards: From riots to floods, breakdowns to robbery, when life is chaotic, your insurer cannot be.
Peace of Mind: Everything is organised and handled professionally, so there won't be any more restless nights in the event of a crisis.
Best Commercial Vehicle Insurance Plans 2025
According to evaluations, insurer infrastructure, claims procedures, and expert ratings, these are India's best commercial vehicle insurance for 2025:
Provider & Plan
Highlights
Why is it Good?
Digit Commercial Vehicle Insurance
Customizable plans, paperless issuance, 24×7 support; Awarded “Asia’s General Insurance Co of the Year 2019-20”.
Streamlined buying/claims, trusted brand, strong digital backbone.
Bajaj Allianz Comprehensive CV Policy
24/7 assistance, full coverage of driver, cleaner, and paid staff; strong network.
Holistic, instantly accessible help and built for real-world challenges.
Rs. 15 lakh personal accident protection, up to 60% advance claim settlements, multiple nil depreciation claims allowed.
High safety net and swift claim advances, great for heavy usage.
Note: Our top plan selections are based on: Industry recognition, customer experience metrics, insurer comparisons, features, and ratings.
How to Calculate Commercial Vehicle Insurance?
It's not hard to figure out how much your commercial car insurance will cost; there is a method to it.
Car Insurance Premium = Own Damage Premium – (No claim bonus + discounts) + Third Party Liability
Insurance companies provide a convenient premium calculator: simply enter the vehicle's make, model, registration state, manufacture year, and your personal details. When you click "calculate," you'll get an estimated premium for both new and used vehicles, be it comprehensive or third-party.
Here's a brief look at third-party premiums (exclusive of GST; comprehensive additions cost more):
Vehicle Category
Third Party Premium
Goods carriers (≤7,500 kg GVW)
Rs. 16,092
Goods carriers (7,501–12,000 kg)
Rs. 28,288
Goods carriers (12,001–20,000 kg)
Rs. 35,139
Goods carriers (20,001–40,000 kg)
Rs. 44,342
Goods carriers (Above 40,000 kg)
Rs. 44,457
3 wheelers (public)
Rs. 4,489
3 wheelers (private)
Rs. 3,922
Trailers - Mini
Rs. 918
Trailers - Other types
Rs. 2,507
You can expect to pay an extra few thousand rupees to over Rs. 50,000 a year for comprehensive cover for heavy-duty carriers and other vehicles.
A good tip? Online renewals, avoiding unnecessary add-ons, and choosing electronic payments can all significantly reduce the price you pay.
Factors Affecting Your Insurance Premium
The insurance premium for your commercial vehicle is determined by a variety of factors. Here are the details:
➜ Insured Declared Value (IDV)
This is basically the current market worth of your car. A higher IDV provides more coverage, but at a higher cost.
➜ Vehicle Details - Type & Size of Engine
Larger engines mean more danger, which means higher insurance rates. That's just basic maths.
➜ Policy Type and Add-Ons
The cost of third-party insurance is lower. However, adding options like zero-depreciation, roadside assistance, or return-to-invoice to a comprehensive plan makes you sleep better, but it comes with a cost.
➜ Mandatory and Voluntary Deductibles
Your premium will go down if you choose a higher deductible, but keep in mind that you will have to pay more out of pocket in the event of a claim.
➜ Claim History & No Claim Bonus (NCB)
Over a five-year period, you can receive a savings of up to 50% if you remain claim-free. However, one claim may offset that benefit.
➜ Registration Location and Usage Pattern
High-risk areas or crowded city streets? You can expect premiums to reflect this. Also, public carriers are subject to higher charges than private ones.
➜ Driver Credentials
It may surprise you to learn that your driving record and licence history also matter. Lower risk equals lower rates.
➜ Age and Condition of the Vehicle
Although they might not be eligible for as many add-ons, older cars have lower insurance costs.
Things to Consider Before Buying Commercial Vehicle Insurance
Prior to clicking "buy," pause and consider this:
Coverage: Third-party coverage is less expensive, but comprehensive coverage protects other drivers as well as the vehicle you drive.
Insured Declared Value (IDV): If your vehicle is completely lost, a greater IDV will result in a higher premium but also a higher claim settlement.
Claim Settlement Ratio: You want an insurance company or broker with a reputation for managing claims efficiently.
Deductibles: Select between mandatory and voluntary deductions. Choosing a more expensive optional one results in reduced premiums but more financial hardship in the event of a claim.
Cashless Garage Network: For hassle-free repairs, find out if your insurer has a partnership with network garages.
Add-ons Suitability: Don't waste money on features you won't use; just choose what makes sense for your vehicle and business needs.
Add-ons in Commercial Vehicle Insurance
You can really improve your basic insurance with these extra covers:
Engine & Gearbox Protector: This prevents unpleasant surprises when it comes to repair expenditures by covering internal failures caused by accidents, water intrusion, and oil leaks.
Consumable Protection: Protects those bothersome components like nuts, bolts, and gaskets, ideal for cashless garage use.
Roadside Assistance & Towing: Get peace of mind when you're stuck on the side of the road, whether it's a flat tyre or an empty fuel tank.
Zero Depreciation Coverage: Ensures your coverage pays the entire part value rather than the depreciated rate. Though not required, it is a wise choice for high-value vehicles.
Why Choose SMC Insurance for Your Commercial Vehicle?
Compared to other options, SMC Insurance is far better and offers many significant benefits:
Multi-Company Comparison: With SMC, you may compare plans from leading insurers in a single place without being pushed.
Clear Guidance: They don't use middlemen and provide clear explanations of fine print, exclusions, and even assistance with claims.
Strong Digital Tools: You may purchase, renew, check premiums, access documents, and initiate claims all using the application.
Cashless Garage Locator: Prevents inconvenience at accident scenes or unexpected malfunctions.
Reliable Support: They offer a 24/7 line and WhatsApp support for any policy questions or post-claim help, which is a true peace of mind.
How to Buy Commercial Vehicle Insurance from SMC Online?
SMC's online method is as simple as ordering a chai:
Click on "Commercial Vehicle Insurance" on the SMC website.
Enter the car type, make and model, RTO region, and duration of the insurance policy.
Browse and compare prices from partner insurers.
Select your add-ons (such as roadside assistance or engine protection) and coverage.
Pay online, and insurance documents are delivered to your inbox promptly.
Download the policy through the SMC app or email, make sure everything is correct, and you're ready to go.
A surveyor is appointed by SMC, who inspects and approves repairs.
The garage delivers invoices to the insurer, and you pay the deductible or consumables.
Charges are settled directly between the insurer and the garage.
Reimbursement Claim
Report the accident and pay for the repairs up front.
Submit the claim form, bill, FIR (if a third party is involved), and any other relevant documents.
The surveyor checks the repair, and SMC initiates the reimbursement to your bank.
Policy copy, ID, RC, driver's license, repair invoice, FIR (where applicable), and claim form are required documents. The SMC app allows you to easily upload files and track the processing of claims.
From side-by-side comparisons and quotes from many insurers to filter-free guidance, claims assistance, and a handy app, SMC's customer-focused, digital-first products make them an excellent choice for any business owner.
Summing Up
When things go wrong on the road, commercial vehicle insurance is your safety net. The correct coverage keeps your wheels (and revenue) veering, whether it's a minor collision or a serious accident. Consider it an investment in mental well-being rather than merely security. With support like SMC Insurance, you can future-proof your business in addition to insuring your car with features like customised add-ons, round-the-clock assistance, and easy digital procedures. Thus, don't wait for problems to arise. With the right policies in place, you can grow your business with assurance, security, and complete authority.
Yes, you can easily purchase it online through platforms like SMC Insurance. Just enter your vehicle details, compare quotes, pick the plan, pay, and receive your policy instantly.
Yes, at least third-party insurance is legally required for all commercial vehicles on Indian roads.
No, you’ll need to purchase a separate commercial policy. Private insurance doesn't cover business use.
Yes, passenger and goods vehicles have different premium rates, coverage types, and regulatory norms due to their unique risk profiles.
You could face fines up to Rs. 2,000 and/or imprisonment. Plus, any accident-related liability could fall entirely on you.
Premiums vary based on vehicle type, engine capacity, usage, and location. For example, TP premium for a 7,500 kg goods vehicle is around Rs. 16,049/year.
You’re liable for all damages (your own and third-party); plus, you risk fines, legal issues, and business disruption.
It’s based on factors like vehicle type, engine capacity, IDV, location, usage, driver history, and selected add-ons.
Legally, yes. But if you want protection for your own vehicle too, opt for a comprehensive policy as it is smarter in the long run.
Yes, you can transfer the policy to the new owner with the insurer’s approval. Make sure to update ownership details.
It’s a reward for not making any claims in a policy year. You get a discount on your renewal premium, up to 50% over time.
Yes, if you’ve included personal accident cover or opted for specific employee protection add-ons.
Yes, passenger-carrying vehicles like cabs, taxis, and auto-rickshaws have tailored insurance plans to cover passenger-related risks.
Visit your insurer’s website or app (like SMC Insurance), enter your policy details, pay online, and you’ll receive a renewed policy instantly.
Only if you’ve opted for the engine protector add-on. Basic plans usually don’t cover engine or gearbox damage caused by waterlogging or oil leaks.
