As per the Motor Vehicles Act of 1988, any commercial vehicle riding on Indian roads should be equipped with a commercial vehicle insurance policy. If you have recently purchased a vehicle and are planning to use it for commercial purposes, then you should be aware of the several jargons that come up in an insurance policy. Moreover, commercial vehicle insurance works a bit differently than a regular car or motor insurance. So, a good understanding of these terms/jargons is vital. To help you in the process, we take a look at 7 commercial vehicle insurance jargons and explain them in brief.
- Comprehensive commercial vehicle insurance
Just like bike and car insurance has two variants – third-party and comprehensive, so does commercial vehicle insurance. Comprehensive insurance for commercial vehicles covers damages related to theft, vandalism, and other untoward incidents. Do remember that a comprehensive policy is inclusive of third-party liabilities but it is not the same vice versa.
The term ‘coverage’ gets a bit complex in commercial vehicle insurance. Since commercial vehicles are of varying types such as taxis, buses, trucks, and so on, the extent of coverage of the insurance plan also differs. For instance, an insurance policy for a truck may cover the hauled cargo against theft or damage, but an insurance policy for a taxi/bus may not cover against damages to the cargo of its passengers.
- Insurance quote
The quote is the same as the premium – the amount that you are expected to pay in regular instalments in return for the coverage from the commercial vehicle insurance. The quote is influenced by several factors such as the planned commercial usage of the vehicle, the cubic capacity of the vehicle, driving history, and so on. Remember: the more the risk, the higher is the premium.
The deductible is a part of the amount that you are expected to pay for the repairs while the rest is taken care of by the insurer. The deductible is usually decided at the start of the policy. There are two types of deductibles – voluntary and compulsory. The former is decided by you while the insurer determines the latter. Opting for an increase in the voluntary deductible leads to reduced premiums.
- Claim settlement ratio
The claim settlement ratio is an indicator of the insurer’s ability and dedication to solving the policyholder’s claims. It refers to the number of claims received by a company versus the number of claims resolved by them in one year. A claim settlement ratio of over 90% is considered ideal by most.
- No Claim Bonus
The No Claim bonus is a feature of commercial vehicle insurance as well as motor and car insurance wherein the policyholder can get a discount or bonus on the premium if they maintain a claim-free year. The longer the period with no claims, the higher is the discount. In most cases, the highest it can go up to is 50%.
Add-ons, or riders as they are sometimes called, offer additional protection to your vehicle and fill in the gaps sometimes left by commercial vehicle insurance policies. Some common add-ons are zero-depreciation cover, roadside assistance, consumables cover, NCB protector, and return to invoice cover.
Different insurance companies approach commercial vehicle insurance differently. Therefore, while this article attempts to educate you on the common terms, it is advisable that you talk to your insurer before finalizing on any decision. All the best!