Passenger Carrying Vehicle Insurance
What is Passenger Carrying Vehicle Insurance
“Passenger Carrying Vehicle” (PCV) insurance is a subset of commercial vehicle insurance. It applies to vehicles that carry passengers (for hire or otherwise), including things like:
Taxis / cabs / ride-share vehicles
Buses (school buses, city buses, long route buses)
Vans / minibuses
Auto-rickshaws and three-wheelers used for passenger transport
Vehicles carrying passengers for reward (fare) or service
Such vehicles face different and often greater liability risks (passengers inside, possibly many), so insurance for them needs to include special coverage beyond what a private vehicle might need.
Legal & Regulatory Requirements
Under the Motor Vehicles Act, 1988, third-party liability insurance is mandatory for all motor vehicles, including passenger vehicles. This covers injuries or deaths of third parties (outside the vehicle) and damage to property.
Insurers and the IRDAI (Insurance Regulatory and Development Authority of India) prescribe minimum rates and rules for third-party cover for different classes of vehicles, including passenger carrying ones.
Many policies must also include Personal Accident (PA) cover for the owner/driver. The amount (sum insured) and who is covered depends on rules / policy.
For vehicles carrying passengers for hire or reward, there may be additional legal obligations (permits, fitness certificates, safety checks, etc.), and insurance often includes liability to passengers.
What Coverage Typically Includes
Here’s what a typical insurance policy for a passenger carrying vehicle may provide:
| Coverage / Feature | What It Means / Covers |
|---|---|
| Third-Party Liability (TP) | Mandatory cover for bodily injury / death of third parties, and damage to third-party property. |
| Own-Damage (OD) | Covers damage to the insured vehicle itself: accidents, fire, natural perils, theft, etc. (usually optional if you want more than just minimum). |
| Passenger Liability | Liability arising due to injuries or death of passengers inside the vehicle (fare-paying or non-fare paying, depending on policy). Sometimes included or as add-on. |
| Personal Accident Cover | Covers injury, disability, or death of owner/driver, and optionally for conductor / driver / cleaner, etc. |
| Add-Ons | Could include things like breakdown/roadside assistance, coverage for equipment/custom parts, zero depreciation, loss of income, extended geographical usage, etc. |
| Legal / Permit Compliance | Some policies factor in compliance with safety / permit / route obligations. Failure to maintain legal permits or overload/incorrect usage can lead to claim rejection. |
Premiums & What Determines Cost
The premium (insurance cost) for passenger-carrying vehicle insurance depends on several factors:
Seating capacity / number of passengers — More seats = more liability risk.
Vehicle type, make, model, capacity / engine size — Larger, heavier, or more powerful vehicles tend to have higher repair costs and risk.
Vehicle age / condition — Newer vehicles often cost more but may have better safety features; older ones may have cheaper parts but more risk.
Insured Declared Value (IDV) — The value you declare for the vehicle; affects how much insurer will pay in case of total loss / theft. Higher IDV → higher premium.
Geographical zone / city / registration location — Registration in a high risk area (traffic congestion, accident-prone, theft prone) increases premiums.
Use / frequency / kilometers / routes — If the vehicle is used a lot, on riskier routes, many hours, night operations etc., these increase risk.
Driver profile — Driver’s past records, age, experience, driving license, etc.
Add-ons / extra covers — Adding passenger cover, higher PA sums, and other riders increase cost.
No-Claim Bonus or claim history — If you have clean past, lower claims, etc., you may get discounts.
What’s Not Covered / Common Exclusions
Some things that typically are not covered by passenger carrying vehicle insurance policies, or may lead to rejection of claims:
Use of the vehicle beyond what is declared (e.g. carrying more passengers than permitted).
Driving without proper permit / license or when vehicle does not meet legal fitness standards.
Mechanical breakdowns, wear and tear, normal ageing.
Overloading, misuse.
Damage when vehicle is driven by someone not listed or not authorized.
Certain perils may be excluded unless you explicitly cover them by add-on (e.g. riot / strike, war / terrorist act, nuclear risks).
Recent Changes / IRDAI Guidelines
IRDAI / Government regularly issues draft notifications / rules for Motor Third-Party Premium & Liability Rates, for different classes including passenger-carrying vehicles. These define base TP premiums per vehicle class, per seating capacity etc.
Some policies (or proposals) have been to revise (increase or adjust) rates for passenger carrying vehicles.
IRDAI also mandates that insurers must include certain covers without extra premium, especially for employees traveling in employer’s vehicles under certain conditions. But that’s more relevant to private cars and employee travel, rather than public passenger vehicles.
Practical Tips for Passenger Vehicle Operators / Owners
If you have / are planning to insure a passenger-carrying vehicle, here are some tips to get good value:
Be very clear about usage, how many passengers, routes, hours of operation etc. when getting policy quotes. Under declaring usage or seating can lead to claim rejection.
Compare multiple insurers and get quotes for both TP + OD + relevant add-ons.
Ensure your vehicle has all required legal permits, fitness certificates, and safety features; also regularly maintain it. That helps reduce risk and claims.
Choose reasonable IDV — neither too high (paying unnecessary premium) nor too low (bad payout).
See if fleet discounts are available (if you own multiple vehicles).
Consider add-ons relevant for passenger hazards, e.g. higher personal accident cover (for driver, conductor, possibly passengers), liability to passengers, even legal liability for employees.
Renew on time, keep a clean claim history if possible.