I own a small logistics business and recently purchased a light commercial vehicle for city deliveries. Since this is my first commercial vehicle, I’m not very familiar with how motor insurance works in terms of pricing, coverage, and claims.
How is insurance for light commercial vehicles structured, and what factors influence the premium for vehicles used for daily city deliveries?
I’m also unclear about the add-ons available for commercial vehicles and how useful they are in real-world situations. As a small business owner who depends on this vehicle for regular income, what covers and add-ons should I ensure so that downtime due to accidents or breakdowns does not m impact my earnings?
– Name withheld on request
For small logistics businesses, a commercial vehicle is directly linked to daily cash flow. Even a short disruption due to an accident or breakdown can impact deliveries, customer commitments, and earnings. That is why motor insurance for commercial vehicles should be evaluated not just on compliance or premium costs, but on how effectively it helps minimize operational downtime.
How pricing works
Insurance pricing for light commercial vehicles is usually determined by factors such as the vehicle’s make and model, insured declared value (IDV), location of registration, usage intensity, payload category, claim history, and the type of goods being transported.
Vehicles operating extensively in dense urban conditions are naturally exposed to higher traffic risk, frequent stop-and-go movement, and faster wear and tear, which can influence premiums over time.
A comprehensive commercial vehicle policy generally covers own damage, third-party liability, theft, fire, and damages arising from natural calamities. However, for small business owners who depend on uninterrupted daily operations, add-ons play an equally important role because they help reduce both repair costs and business disruption.
Add-ons that matter
Some add-ons are particularly useful for city-delivery vehicles:
Zero Depreciation Cover helps reduce depreciation-related deductions on replaced parts during claims and is especially beneficial for newer vehicles.
IMT 23 is a useful add-on for commercial vehicles because it enables claim coverage for commonly damaged exterior parts like tyres, headlights, bumpers, mudguards, bonnet, side panels, and paintwork — items that otherwise face restricted or limited claim settlement in a standard commercial vehicle policy. It is especially valuable for vehicles operating in city traffic or heavy-duty usage where minor collision damage is frequent.
Roadside Assistance becomes valuable during towing situations, battery failures, or unexpected breakdowns in the middle of delivery schedules.
Engine Protect is important in cities prone to waterlogging, where engine damage during monsoons can lead to significant repair expenses.
Consumables Cover can help pay for items such as engine oil, lubricants, nuts, bolts, and similar expenses that are typically excluded from standard claims.
Return to Invoice Cover can be useful in case of theft or total loss by covering the gap between the invoice value and claim settlement amount.
Loss of Income or Downtime Covers, wherever available, can provide an additional financial cushion for businesses that rely heavily on daily vehicle utilization.
One of the most common mistakes first-time commercial vehicle owners make is selecting a policy purely on the basis of the lowest premium. In practice, factors such as claim servicing, turnaround time, access to a strong cashless garage network, and the right add-on structure often matter far more when the vehicle is unexpectedly off the road. For small businesses, the right motor insurance policy should not only protect the vehicle, but also help protect the continuity of the business itself.
Sarbvir Singh, joint group CEO, PB Fintech
