Since technology hit transportation, commuting, logistics and supply chain, an entire wave of new entrepreneurs have come up as stake holders in a thriving eco-system of tech-enabled commuters, deliverers, suppliers, carriers and driver partners.
It is therefore imperative for the stakeholders that the risk factors of the movable infrastructure be timely acknowledged and addressed.
Drivers, owners, co-owners and facilitators of any transport operating fleet must be aware of the below pointers when they buy motor insurance for their commercial vehicles. Awareness always lead to big savings.
1. IMT 23 Insurance:
IMT 23 is for commercial vehicles. Owing to the distances and wear-and-tear a commercial vehicle faces compared to a private vehicle, coverage for lamps, tubes, tyres and bumpers is generally excluded from the normal insurance policies. However, if one opts for IMT 23, this exclusion will be come down to 50 percent. If one opts for depreciation cover, depreciation will not deducted in case of partial loss claims .i.e. entire claim amount will be reimbursed deducting policy excess and salvage. If you want to take nil depreciation cover for commercial vehicles it is suggested that you opt for an IMT 23 first, to make the cover more comprehensive.
2. Salvage Value of the Parts removed:
Coming to the concept of Salvage in this segment, it must be understood first that “Salvage value” and “Scrap value” of any asset are not the same. Suppose in case of some damage to a vehicle, the Insurance Company may pay for the radiator, bonnet and bumper parts. If the radiator is in a functional state, it is of greater use and may fetch a “salvage” value in the market, due to its
usability. However, bonnet and bumper are damaged metal parts that are beyond repair and cannot be used any further in their current shape and size, hence will only fetch some “scrap” value in the market. In many motor Insurances these days, customers are allowed to take away the scraped items and sell them to a scrap dealer in case they want to; else the option to adjust the scrap value in the co-insurance amount is always present.
3. Third Party Insurance:
First party is the owner of the vehicle, second party is the Insurance Company and third party is the person who gets injured, in case the vehicle gets involved in any accident. A Third Party Insurance Cover offers protection to the third party from injuries, death, or damage to property in an accident. So, the third party can claim for compensation under the third-party cover of your auto insurance. This component is most of the times part of a comprehensive Insurance coverage for a commercial
4. Net Insurance Declared value (IDV):
It should be noted that the IDV is the maximum amount that you are liable to receive if your car or any other commercial vehicle you own is stolen or totally damaged beyond repair after an accident. It is generally recognised as a trend amongst the Commercial vehicle owners and stakeholders that in a bid to lower the premiums and make an interesting offering, the Insurers often lowers the IDV. The IDV is determined at the time of policy purchase and is agreed upon by the insurer and the customer. If you have agreed upon an IDV of Rs.9 lakh, this is the maximum amount you stand to receive in the event of a total loss claim. Lower the IDV, lower the premium you need to pay for your vehicle. However, be completely aware about the consequences of the agreeing to a low IDV. Although, the highest IDV allowed to be quoted is also, dependent on the claim history, the owner of the fleet must aim to gain maximum value in IDV which implies a greater reimbursement in case of total loss.
5. Additional coverages: A Commercial vehicle insurance can also be extended to cover the below:
• Loss or damage to electrical and non-electrical accessories.
• Legal liability to employees (cleaners/paid drivers).
• Legal liability to fare and non-fare paying passengers.
• Legal liability to employees of the insured (other than cleaners/paid drivers)
• Personal Accident cover for any insured, any named person or unnamed person.
A thoughtful decision of purchasing commercial vehicle insurance for your fleet helps you in making healthy profits and avoid unfortunate financial loses.
Therefore owners of commercial vehicle fleet, must use the latest and the most advanced information w.r.t policy purchase and fleet maintenance to their benefit. They must zero down on the correct quote for their fleet after speaking to consultants, agents and brokers and secure the most in their assets.