Car Insurance

How Does the Insurance of Your Cab Affect You?

By Admin
Apr 14, 2021

In this day and age where the start-up culture is receiving a lot of traction and support, running your own cab service might seem like a lucrative business idea. This can be in the form of having a fleet of taxis under your name or renting or leasing out cars for commercial use. This is an excellent business proposition, though not devoid of its own set of risks.

In order to de-risk this business and to ensure the safety of your car, the driver, and its passengers it is advisable to purchase a comprehensive car insurance cover.

What is the difference between insurance for a private vehicle and a commercial vehicle such as your taxi?

Private car insuranceCommercial car insurance
It is defined as an insurance cover that protects the insured from financial losses that are incurred as a result of theft, accident, and natural calamities.It is defined as an insurance policy that protects the owner of the commercial vehicle from liabilities or costs that arise out of accidents, theft, etc.
The main purpose of this policy is to de-risking personal injuries and losses due to damage caused to the car.The main purpose of this policy is to de-risking the business of the policyholder from liabilities arising out of an accident.
The policyholder in case of an accident, theft, etc. is covered.The hired drivers and passengers are covered.
The premium in such a policy cover is lesser than the premium for commercial car insurance.A higher premium will be charged in a commercial car insurance policy.
The risk that the insurer has to undertake will be comparatively lesser.The risk that the insurer has to take will be comparatively higher simply due to the fact that it is on the road for a longer period and is more vulnerable to accidents due to this.
The mandatory cover is offered for third-party liability.The mandatory cover is given for third-party liability and driver and passenger cover.
The liability limits are comparatively lower.The liability limit is higher since the insurer offers financial protection against legal challenges that the policyholder might incur due to the accident.
In case of an accident, the claim process mandatorily requires an FIR, and spot inspection will be done by the surveyor of the insurance company.FIR is not mandatory in case of a claim settlement process.
Towing Disabled Car Cover does not exist for this policy.Any damage/ loss incurred by the car of the insured while being towed to the garage will be covered by the insurance company under the policy.

Difference between third-party liability and comprehensive insurance policy with respect to taxis

BasisComprehensive Insurance PolicyThird-party Insurance Policy
What is it?It is a wide-ranging, inclusive cover that offers the insured protection for the damages caused to the car as well as covers for third-party liabilities.An ‘act only cover’ is a type of liability insurance purchased by the owner of the automobile, for protection against the claims of another party in case of damages and losses suffered during an accident.
Premium priceIt is higher than third-party insurance due to higher coverage and benefits.The premium is one of the lowest amongst the different kinds of car insurance policies available in the market. It is determined by the Insurance Regulatory and Development Authority of India (IRDAI).
CustomisationsThere is scope for customisations in the form of add-ons such as Road Assistance, NCB Protect, etc.There is no scope for customisation.
Coverage details

Offers coverage for eventualities such as –

  • Medical payments.
  • Property damage insurance includes both collision protection insurance and comprehensive insurance that covers theft, damage caused by third parties, riot damage, arson or vandalism, natural disasters, etc.

The eventualities covered under the policy are only for third-party –

  • Partial disability
  • Permanent total disability
  • Death
  • Property damage
Should the cab owner opt for it?Having a comprehensive cover becomes almost indispensable for commercial vehicle owners to de-risk one’s business and to ensure that your driver and passenger’s safety is secured.It is mandatory as per the Motor Vehicles Act, 1988.

Features of a fully comprehensive plan for a cab:

Medical payment insurance - for the treatment of the car driver and all the passengers that are present in the car at the time of the accident. The premium will increase depending on the size of the cab and the number of passengers that it can accommodate.

Property damage insurance – recovers the loss that the vehicle incurs after the accident.

Collision protection insurance – comes into effect when the cab/taxi collides with another car or any other stationary object or when the car participates in a roll-over event to cover the repair costs of the cab.

Comprehensive insurance – this insurance will cover all the damages caused due to theft, vandalism, fire, and other natural and manmade disasters. However, damages caused due to car collisions will not be covered under the policy.

Importance of such insurance for the efficient running of your business

A commercial vehicle insurance policy will contribute to the efficient running of one’s business in the following manner –

  • Cab insurance that covers business interruption will be extremely beneficial for those car owners who have the cab service business as their only source of livelihood. Such a policy cover will ensure that the income of the taxi owner will be protected on those days where the vehicle or the driver fails to operate on account of an accident.
  • The business of the cab owner will be protected in case the taxi meets with an accident due to a motorist’s callousness – this will be in the form of ‘Uninsured or Underinsured Motorist Insurance’.
  • One has the option of getting fleet insurance to ensure that all commercial motor cars are covered under a single policy cover.
  • The car owner also has the option of extending a single driver to multiple drivers’ policy in case he or she owns more than a single car.
  • An insured taxi fleet will ensure that one’s business does not face any losses or downtime due to an unforeseen incident, giving one sufficient legroom to spend his or her money and time towards other productive activities that contribute to the overall growth of one’s business.
  • This also works in favour of building the goodwill of the business by showing both one’s customers and taxi drivers that he or she is serious about their health and safety.

Conclusion

A commercial vehicle, the purpose of which is to ply passengers and employees, is different from a car bought for one’s own use. There are a lot more considerations that one must keep in mind while playing passengers for business.

You must exercise extreme caution while purchasing the policy cover for the car in order to minimise liabilities and losses. A commercial vehicle insurance cover will give you the necessary financial protection in case of an unforeseen incident.

Share article with your friends
Admin
visa verified mastercard pcidss compliant rupay
  • Paytm Insurance Broking Private Limited. Address: 136, 1st Floor, Devika Tower, Nehru Place, NEW DELHI, South Delhi, Delhi, India, 110019
  • Registration No. 700. Valid till 16/02/2023
  • CIN - U66000DL2019PTC355671