How is Commercial Vehicle Insurance Premium Calculated?

When you have a business, your first thought is availing an insurance cover to safeguard against any unexpected losses. But have you considered getting insurance for the vehicles used in your business?

Almost all entities require a vehicle for some or the other form of transportation. Be it procurement of raw materials to making deliveries, it is an essential part of your supply chain. Imagine this vehicle meeting with an unfortunate accident and requiring a high cost of repairs. This situation will surely affect your cash flows.

In the case of cab aggregators or others that provide services using their vehicle, it forms a crucial part of their operations. So how can they remain free from financial worries?

Buy commercial vehicle insurance! Missing out on insurance should be the last thing in that case.

What is commercial vehicle insurance?

Akin to private motor insurance plans, commercial vehicle insurance covers the damages or accidents in commercial vehicles like cargo vehicles, passenger-carrying vehicles, trailer trucks, excavators, mobile rigs, tractors, etc.

A commercial policy protects against the different scenarios that are faced by these vehicles. Thus, any financial setback can be averted by using commercial insurance covers.

Commercial motor plans too, can be purchased using the digital medium. The ease of buying motor insurance online helps the business owners avail of these facilities as per their convenience.

What makes commercial vehicle insurance a nifty tool?

If you are an entrepreneur and own a commercial vehicle, it is essential you protect your vehicles with a commercial motor policy. Here are the top reasons that make buying one a handy option.

Legal prosecution

Any third-party liability that has a legal obligation on you can be averted if an accident or bodily injury to such another person or vehicle occurs.

No financial obligations

By opting for an adequate motor insurance cover, you don’t have to pay for damages caused either to yourself or other people along with damage to property. Your insurance company ensures you are free from any obligations that may arise on you in case of a mishap.

Reimbursement of repair costs

Commercial vehicles have a high usage requiring frequent repairs for their upkeep. Using a commercial insurance policy can help you get your vehicle serviced on time to avoid any breakdowns.

What is the basis of calculating premium amounts?

Here are the key factors that influence the premiums to your commercial vehicle insurance –

Insured Declared Value (IDV)

Insured Declared Value or IDV is the maximum amount that is offered by the insurance company in case of a total loss of your vehicle. This IDV is determined at the beginning of each policy period. It influences the risk that the insurer needs to undertake, which has an impact on the premiums for your motor insurance policy.

Vehicle’s age

The premium for vehicles is determined considering its age. The older the vehicle, the higher is its premium as the risk for an electrical or mechanical failure or wear and tear is higher.

Operating weight

The gross weight or the maximum carrying capacity of the vehicle has a footprint on the premium amounts. Higher premiums are charged as the insurer needs to cover more risk involved due to higher truck load.

Location of registration

Lastly, the place of registration determines the premium amount. Insurance companies have classified each location into zones that have variable premiums across the country. Say, for example, vehicles registered in metro cities have slightly expensive premiums as the risk that it may face is higher.

So if you have a business that utilizes vehicles, then make sure you get commercial vehicle insurance. It will ensure that you remain stress-free with an added cover on vehicles. Lastly, don’t forget to compare the different policies using a vehicle insurance calculator to get the best deals at the right prices.

At, We’ll help you understand the different types of car insurance, find the right deal on car insurance, and compare rates. We’ll also give you tips on how to keep your policy in good condition and protect yourself from potential accidents.

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