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Understanding the Differences Between Private and Commercial Car Insurance in Nigeria

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A car insurance policy covers your car from any damages or losses during an accident, theft, fire, or any other issue that arises due to road usage. It provides various types of coverage to car owners. However, it all depends on the insurance package you purchased.

There are various types of car insurance. There’s third-party and comprehensive car insurance. Another type of insurance you’ll offer is private car insurance and commercial car insurance.

While third-party and comprehensive car insurance is popularly known, not many know about private and commercial car insurance. Below, we discuss everything you should know about these two types of car insurance.

What is Private Car Insurance?

Private car insurance, as the name implies, is a type of insurance designed for those who use their cars for personal purposes. It’s for cars that are not used for business activities, such as transporting goods or people.

Private car insurance provides coverage for third-party liabilities as well as any loss or damages caused to the vehicle due to theft, accident, fire, or any other road occurrences. 

What is a Commercial Car Insurance

Commercial car insurance is a vehicle insurance policy that covers cars used for business purposes. The policy provides protection for commercial vehicles whose loss or damage can affect the business operation.

This is a type of car insurance given to taxi, Danfo, and Keke Napep drivers. A commercial car insurance policy covers damages to a commercial car, including third-party legal liabilities and many other issues that arise with a commercial vehicle.

What is the Difference Between Private and Commercial Car Insurance?

There are a handful of differences between private and commercial car insurance in Nigeria. To know more, look at the table below.

CategoriesPrivate Car InsuranceCommercial Car Insurance
Risk LevelPrivate car insurance has lower risks than a commercial vehicle. Why? Because it doesn’t spend as much time on the road as commercial cars.Commercial car insurance is exposed to higher risks as they spend the majority of their time on the road for business purposes.
Car Insurance PremiumCommercial car insurance is exposed to higher risks as they spend the majority of their time on the road for business purposes.Commercial car insurance are exposed to higher risks as they spend the majority of their time on the road for business purposes.
Claim ProcedureTo make a private car insurance claim, a thorough survey or investigation of the vehicle is not mandatory. However, this depends on your insurance company.The claim filing procedure contains several processes, and the investigation is compulsory. 
Claim DocumentClaim documents for private car insurance might only include a vehicle registration certificate, driving license, and insurance certificate.The premium of commercial car insurance is higher as it has higher risk factors compared to that of private car insurance.

Should I Buy a Private or Commercial Car Insurance Policy?

The type of car insurance your vehicle needs depends on what you use the vehicle for. Is your car a private car? Then you need to purchase private car insurance. If it’s a commercial car, then you are better off with a commercial car insurance policy, as it has better coverage for issues that could arise with a commercial car insurance plan.

Can I Convert a Commercial Car Insurance to a Private Car Insurance Policy?

The only time you can change commercial car insurance to private car insurance is only when the vehicle is now being used for private purposes. Converting your commercial car insurance to private car insurance while you still make use of your vehicle for commercial purposes is a risky move.

Conclusion

Private car insurance and commercial car insurance are both important for car owners. Just that they have different coverages. So, ensure to know what you use your car for before purchasing any one of these two types of car insurance from an insurance company.

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