What are the pros and cons of converting a private car to commercial use?
1 Answers
Converting a private car to commercial use has the advantage of earning money by transporting passengers, but the drawbacks include increased insurance costs and mandatory retirement after a certain service period. Many drivers opt to become ride-hailing drivers, often converting their private cars into commercial vehicles. If you are considering converting your private car to commercial use, careful consideration is necessary. Below are the key points: 1. Commercial vehicle insurance does not cover risks such as fire, explosion, or spontaneous combustion, which are included in private car insurance: Commercial vehicle insurance excludes coverage for fire, explosion, or spontaneous combustion risks that are typically covered under private car insurance. Private cars are used for regular driving and do not transport hazardous materials, making such risks relatively low. However, commercial vehicles frequently transport dangerous goods, increasing the likelihood of such incidents during transit and resulting in losses. The probability of these incidents is significantly higher for commercial vehicles, leading insurers to exclude them from coverage. 2. Commercial vehicle insurance payouts are directly linked to the number of claims, unlike private car insurance: Commercial vehicle insurance claims are more complex, primarily to encourage safer driving practices and minimize risks. For instance, if a vehicle is frequently involved in accidents, the compensation paid by the insurer will decrease progressively. Frequent accidents involving commercial vehicles are detrimental to both the vehicle owner and society, often causing losses to others. To reduce the occurrence of such accidents, insurers may lower compensation amounts. Additionally, for vehicles with a high risk of accidents, insurers may increase insurance premiums as a safeguard for their interests.
