Whether you drive a vehicle for private commercial purposes, you must insure it with car insurance, which provides financial protection against damage to the car. This blog will discuss the differences between private and commercial vehicle insurance.
What is Commercial Car Insurance?
Commercial car insurance is an insurance plan that covers four-wheelers used for commercial purposes. It provides protection to commercial four-wheelers whose loss or damage can adversely impact the owner’s business.
Commercial car insurance policies are issued to taxis or cabs, where the vehicle is used to transport individuals from one place to another in exchange for money.
Just like private car insurance, a commercial car insurance plan also covers damages to the car and third-party legal liabilities arising from property damages or accidental deaths/injuries of third parties.
Besides offering personal accident coverage for the car’s driver/owner, it also covers employees and paid drivers against accidental disability or death.
What Is Private Car Insurance?
Private car insurance refers to a type of motor insurance policy designed to provide coverage for cars used for private purposes. It is a type of four-wheeler insurance policy meant for four-wheelers that cannot legally be used for business or commercial activities, such as transporting people or goods from one place to another.
A private car insurance plan provides coverage from third-party liabilities and any loss or damages caused to the insured four-wheeler due to floods, fire, theft, earthquakes, riots, accidents, strikes, etc. It also comes with personal accident cover for the driver or owner of the vehicle.
Difference Between a Commercial and Private Car Insurance Policy
Factors | Commercial Car Insurance | Private Car Insurance |
Risk Involved | Commercial four-wheelers are exposed to more risk as they run more miles. | The risk is comparatively lower with a private car |
Legal Mandates | In the case of a private car, third-party liability coverage is compulsory for the owner of the four-wheeler under their insurance policy. | In the case of a commercial car, the owner of the four-wheeler must have third-party liability coverage, legal liability coverage for paid drivers, and personal accident coverage for the four-wheeler passengers under their car insurance policy. |
Insurance Premium Rates | The premium for commercial car insurance is based on the risk involved, the vehicle’s cubic capacity and its age. | The premium for private car insurance is based on the cubic capacity. Also, the premium is comparatively lower compared to commercial car insurance. |
Coverage | A commercial car insurance plan protects the policyholder’s business financially against any damage incurred because of a serious accident.
This car insurance offers coverage against natural disasters, accidents, fires, theft, and personal accidents involving third-party liability and the driver. |
Private car insurance provides financial protection against natural calamities, accidents, fire, theft, riots, Third-party liability and personal accidents. |
To Wrap It Up
Before you buy car insurance, whether private or commercial, it is vital to compare different plans. While comparing plans, you must keep in mind factors such as coverage, price, exclusions and IDV — this will ensure you get the best insurance plan.