Car Insurance – Private vs Commercial

by Ronel Forbes

December 16, 2021

Insurance is a useful instrument for covering your financial expenses in the event that your car is damaged. Motor car insurance is required to protect your vehicle from any losses or damages, whether it is a personal vehicle or a commercial vehicle.

Car insurance should be based on the level of risk. A commercial vehicle may be used for a longer period of time than a personal vehicle, necessitating different coverage for accidental damages or losses.

It is beneficial to be informed of the main aspects of both commercial and private car insurance. Continue reading to learn about the differences between private and commercial automobile insurance, as well as the factors that affect both types of policy.

Private Car Insurance:

Private Automobile Insurance refers to a vehicle insurance policy that covers a car you own for personal usage. Comprehensive Insurance, which comprises Own Damage Insurance and Third-Party Liability, is regarded as comprehensive coverage for your personal vehicle.

The following are the details of personal car insurance coverage provided by the comprehensive insurance plan.

Coverage for Private Vehicles

Provides financial protection against damage or loss caused by an accident.
Theft, natural disasters, fire, and riots are all covered by insurance.
The owner-driver is covered for personal accidents.
Third-party Liabilities.

What Isn’t Included

The car cannot be used for business or commercial purposes.
Coverage for passengers is not included. You can, however, purchase the add-on to safeguard passengers as well.
If you haven’t chosen supplementary coverage, personal drivers are not covered.

Commercial Car Insurance

An automobile you own for commercial purposes, such as a taxi or cab, is covered by a motor insurance policy. Because it contains various hazards, the sort of insurance coverage in this group is slightly different.

Passengers, the driver, and the normal financial coverage for car damage are all included. This might have a negative influence on your business, making it all the more vital to purchase a passenger car or cab insurance coverage.

Also, read: Is it necessary to have insurance to test drive a car?

Commercial Vehicle Insurance Coverage

Provides financial protection to the policyholder’s business in the event of a loss or damage to the commercial vehicle as a result of an accident.
Total loss coverage for theft, fire, and natural disasters.
Provides coverage for the driver’s personal accident.
Option for a passenger cover.
Third-party Liabilities are included.

What Isn’t Included

This does not include the personal usage of the vehicle.
Wear and tear are inevitable.
Breakdown in electrical and mechanical systems.
Radiation/nuclear attack/war-related losses or damages.
Damages incurred as a result of exceeding the car’s capabilities.
Damages caused by someone other than the named driver on the policy driving the insured vehicle.

The distinction between private car insurance and commercial car insurance is as follows:

While both types of auto insurance protect the vehicle financially, they differ in terms of coverage because the risks are distinct. The table below illustrates the distinction between business car insurance and personal vehicle insurance:

Particulars	Private Car Insurance	Commercial Car Insurance
Risk Factor and Premium	Lower price compared to commercial auto insurance due to lower km driven by the personal vehicle.	Higher insurance price due to the business vehicle’s higher mileage.
Coverage	Financial protection against theft, fire, natural disasters, riots, and other misfortunes. The owner-driver is covered for personal accidents. Liabilities owed to third parties.	Provides financial protection against any business losses caused by the insured commercial vehicle being damaged. Drivers are covered, and passengers can be covered if desired. Theft, fire, natural calamities, accidents, and other losses are covered. Liabilities to Third Parties
Mandatory Cover	Third-party Liability	Coverage for third parties, drivers, and passengers
Documents for Claims	Original repair bill, cash receipts in case of reimbursement Registration Certificate Driving Licence, if applicable Copy of insurance policy	Copy of insurance policy, trip sheet, taxation book
Claim Process	The insurance company will do an on-the-spot survey/inspection before beginning the process.	Repair the car at a network garage or receive compensation.

Comparison of Insurance Policies:

Price: Select an insurance coverage that addresses both your needs and your budget.
Coverage: In addition to the regular comprehensive auto insurance policy, consider adding add-on covers like Zero Depreciation, Engine Protection, Return to Invoice, and so on to expand the insurance coverage.
The IDV (Insured Declared Value) represents the current market value of your vehicle. Make careful to check the insurer’s IDV for the premium it quotes. An ideal way to choose the correct insurance for your car, whether commercial or private, is to increase the IDV at a cheaper cost.
Exclusion: It’s critical to study the policy’s terms and conditions to understand what’s covered and what’s not. This will help to lessen the likelihood of claims being rejected.

Is it better to have commercial car insurance or personal car insurance?

When comparing business and private automobile insurance, it’s important to know what you need. Are you planning to use the automobile for business purposes, such as as a taxi to ferry passengers, as a cab to transport staff or students, or for personal reasons, such as visiting friends or relatives? It is dependent on the situation.

It’s also against the law to utilize a personal vehicle for commercial reasons or to earn money. It will result in the transportation authority’s imposing certain fines. As a result, commercial car insurance should be purchased if the vehicle is being used for business purposes, while private car insurance should be purchased if the vehicle is being used for personal purposes.

There are a number of digital insurance companies that provide new features and benefits, as well as the convenience of doing business online. To learn more about commercial or personal car insurance, go to the insurer’s website or to the nearest branch.