All About Bus Insurance: A Comprehensive Guide

Bus Insurance - BimaBandhu
Are you a bus owner or planning to buy one? Discover the importance of bus insurance and how it can safeguard your passengers and vehicle. Get informed and make the right decision with BimaBandhu!

All responsible bus owners in India work on ensuring the safety and security of passengers and vehicles. The roads can be unpredictable, and accidents, natural calamities, and unforeseen events can strike at any time. That’s where bus insurance comes to their rescue, offering a shield of financial protection when they need it the most.

Owning a bus, be it a school bus entrusted with the safety of young students or a commercial fleet catering to public transport, comes with significant responsibilities. A bus insurance policy is not just a legal requirement but a crucial investment to safeguard passengers, your livelihood, and peace of mind.

In this blog, we’ll take you on a journey through different aspects related to bus insurance, unraveling its coverage, benefits, and the factors that set it apart from private car insurance. Understanding the nuances of bus insurance will equip you with the knowledge to make informed decisions 

What is a Bus Insurance Policy?

Bus insurance is a specialized type of commercial vehicle insurance that provides coverage for buses used for various purposes, such as school transportation, public transport, private services, or commercial purposes. This insurance policy protects the bus owner against financial liabilities arising from accidents, damage, theft, or third-party claims.

The primary objective of a bus insurance policy is to provide financial protection to bus owners in the event of accidents, damage, theft, or third-party claims. It not only protects this valuable asset (the bus itself) but also covers legal liabilities arising from injuries or property damage to third parties due to accidents involving the bus.

In general, a bus insurance plan can be any of the following:

  • Third-party liability insurance

This is the minimum legal requirement for bus owners in India. It covers the legal liabilities arising from injuries, property damage, or fatalities caused to third parties in accidents involving the insured bus. However, it does not cover any damage to the insured bus itself.

  • Comprehensive bus insurance

This type of policy offers all-round protection, covering both third-party liabilities and damage to the insured bus. It includes coverage for accidents, fire, theft, natural disasters, and other perils, thereby providing more extensive coverage.

  • Passenger coverage

Some bus insurance policies may also offer optional passenger coverage to provide compensation for medical expenses or accidental death benefits for passengers on the insured bus. This additional coverage ensures that passengers are also financially protected in case of unfortunate events.

There are several reasons why you (being a bus owner) should purchase a suitable bus insurance policy:

  • Financial protection

Bus insurance offers a crucial safety net against unexpected financial expenses arising from accidents, damage, or theft. Without insurance, the cost of repairs or legal liabilities can be overwhelming for you.

  • Legal compliance

Having valid bus insurance is a legal requirement in India under the Motor Vehicles Act, 1988. Operating a bus without insurance can lead to severe penalties and legal consequences.

  • Passenger safety

Bus insurance with passenger coverage also ensures that your passengers’ well-being is prioritized. In case of injuries or accidents, the policy provides financial support for their medical needs or compensation for accidental death.

  • Asset protection

Buses are valuable assets, and any damage or loss can result in significant financial setbacks. A comprehensive insurance policy ensures that your investment in the bus is protected against various risks.

Also Read: Motor Insurance: Features, Types, Benefits, and More

What are the Types of Buses Covered Under Bus Insurance?

Bus insurance provides coverage for various types of buses used for different purposes. Here are the common types of buses covered under this type of motor insurance:

  • School buses

School buses are specifically designed to transport students to and from educational institutions. These buses are an integral part of the education system and are responsible for ensuring the safety of children during their daily commute. A bus insurance policy offers protection for school buses, safeguarding both the vehicle and the students it carries.

  • Public transport buses

Public transport buses are commonly used for city or intercity transportation, carrying passengers from one location to another on established routes. These buses operate on fixed schedules and serve a large number of passengers daily. Insurance coverage for these buses is crucial to protect both the passengers and the operators from potential risks.

  • Private buses

Private buses are hired for specific events, tours, or corporate trips. These buses cater to private groups or organizations and provide transportation services based on contractual agreements. Bus insurance extends coverage to private buses and ensures that both the bus operators and their passengers are protected during their journey.

  • Commercial buses

Commercial buses are used for various commercial purposes, such as employee transportation, tours, and travel services, and shuttle services. These buses may operate within cities or for long-distance travel. Bus insurance policies include coverage for commercial buses, mitigating financial risks for business owners.

  • Luxury buses

Luxury buses offer premium travel experiences and provide upscale amenities/comfort for passengers. These buses are commonly used for long-distance travel, corporate trips, and high-end tours. Bus insurance for luxury buses ensures that these valuable assets are adequately protected against potential damage or accidents.

It’s essential for you to identify the specific type of bus you own and its intended use to choose the most suitable insurance policy. Each type of bus may have unique risks associated with its operation, and the insurance coverage should align with those specific requirements to ensure comprehensive protection. By selecting the right policy, you can confidently operate these vehicles, knowing that your investment is well-protected.

What are the Primary Benefits of Bus Insurance?

  • Financial protection by covering the repair costs in case of accidents or damages
  • Third-party liability coverage to protect against legal liabilities for injuries or property damage to third parties
  • Passenger coverage to provide financial support for injured passengers or compensation for accidental death
  • Comprehensive coverage to protect against a wide range of risks, including fire, theft, and natural disasters (including third-party liabilities)
  • Legal compliance as it helps meet the mandatory insurance requirement for bus owners
  • Reassurance and confidence in handling unforeseen events
  • Asset protection by safeguarding the valuable investment in the bus

What is Covered Under Bus Insurance? 

Bus insurance policies typically offer comprehensive coverage, protecting the insured bus and the owner against various risks and perils. Here are the key inclusions covered under a standard bus insurance policy:

  • Accidents and collisions

Bus insurance covers damages to the insured bus resulting from accidents and collisions. Whether it’s a minor fender bender or a major collision, the insurance policy will provide financial support for repairs.

  • Fire and explosions

In the unfortunate event of a fire or explosion damaging the bus, the insurance policy will cover the repair or replacement costs.

  • Theft and vandalism

These insurance policies include coverage against theft, burglary, and vandalism. If the bus is stolen or maliciously damaged, the insurance company will compensate the owner for the loss.

  • Natural disasters

Bus insurance protects against damages caused by natural disasters such as floods, earthquakes, cyclones, and storms. These events can cause significant damage to the bus, and the insurance policy provides financial relief to the owner.

  • Damage to third-party property

If the insured bus causes damage to third-party property, such as vehicles or structures, the insurance policy covers the resulting liabilities and legal expenses.

  • Legal liabilities

Bus insurance plans also cover legal liabilities arising from accidents involving the insured bus. This includes compensation for injuries to third parties, property damage, and accidental death claims.

It is essential for you to carefully review the specific inclusions mentioned in their insurance policy documents. The scope of coverage may vary depending on the type of policy chosen and the insurance provider. By understanding the inclusions, you can ensure they have adequate coverage to safeguard their bus and passengers from various risks and uncertainties.

What is Not Covered Under Bus Insurance? 

While bus vehicle insurance provides comprehensive coverage, there are certain exclusions or situations where the policy may not provide financial protection. It is crucial for you to be aware of these exclusions to avoid any misunderstandings during the claims process. 

Here are the common scenarios that are not covered under bus insurance coverage:

  • General wear and tear: It does not cover damages resulting from normal wear and tear of the vehicle over time. Maintenance and repairs required due to regular usage are your responsibility.
  • Mechanical or electrical breakdown: Insurance does not extend to cover damages caused by mechanical or electrical breakdowns of the bus. 
  • Damage due to intoxication or negligence: If the bus is driven by an intoxicated driver or if the driver is found to be negligent, any resulting damages will not be covered by the insurance policy.
  • Unlawful use: If the bus is being used for illegal activities or outside the terms specified in the policy, the insurance coverage will be nullified.
  • Racing and speeding: Damages caused while the bus is involved in racing, speeding, or any other illegal activities are not covered under the insurance policy.
  • Damage to goods being transported: Bus insurance does not cover damages to goods or cargo being transported in the bus. For such coverage, additional cargo insurance is required.
  • Consequential loss: These are the losses or damages indirectly caused by the original event, and are generally excluded from bus vehicle insurance coverage.
  • War and acts of terrorism: Damages resulting from war, acts of terrorism, or any acts of violence are typically not covered under standard insurance policies.

It is crucial for you to thoroughly review their insurance policy documents and understand the specific exclusions mentioned by the insurance provider. If there are any uncertainties or questions regarding coverage, it is advisable to seek clarification from the insurance company to avoid any surprises during the claims process.

How to File a Claim Under Bus Insurance? 

Filing a claim under bus insurance can be a straightforward process if you follow the necessary steps diligently. Here’s a step-by-step guide on how to file a claim under bus vehicle insurance:

  • Notify your insurance provider

Immediately inform your insurance company about the accident or incident that requires a claim. Provide all essential details, such as the date, time, location of the event, and a brief description of the damages or injuries sustained.

  • Document the incident

Gather as much evidence as possible to support your claim. Take photographs of the accident scene, the damages to the bus, and any injuries sustained by passengers or third parties. This documentation will serve as crucial evidence during the claim process.

  • Notify the police

If the accident involves injuries, fatalities, or significant property damage, notify the local authorities and file a First Information Report (FIR). Obtain a copy of the police report as it will be required during the claim settlement process.

  • Contact the surveyor

The insurance company will appoint a surveyor to assess the damages and estimate the claim amount. Cooperate with the surveyor and provide all necessary information they may require.

  • Submit the claim form

Fill out the claim form provided by the insurance company accurately and completely. Include all relevant details, such as the policy number, date of the incident, and a detailed description of the damages and injuries.

  • Provide supporting documents

Attach all supporting documents to your claim form, including the FIR, photographs, repair estimates, medical reports (if applicable), and any other relevant documents requested by the insurance company.

  • Await claim settlement

Once the insurance company receives your claim form and supporting documents, they will assess the information and verify the details. If all requirements are met and the claim is found to be valid, the insurance company will settle the claim amount as per the terms and conditions of the policy.

  • Follow up

In case of any delays or queries, maintain regular communication with the insurance company’s claims department. Stay informed about the status of your claim and promptly provide any additional information if requested.

By following these steps and providing accurate and timely information, you can expedite the claim settlement process and ensure that you receive the rightful compensation for the damages and injuries covered under your bus insurance policy.

How to Renew Bus Vehicle Insurance? 

Renewing bus insurance is a crucial responsibility for every bus owner to ensure continuous coverage and compliance with legal requirements. Here’s a step-by-step guide on how to renew bus insurance:

Step 1: Review the policy expiry date

Check the expiration date of your current bus insurance policy. It is essential to start the renewal process well before the policy expiration date to avoid any gaps in coverage.

Step 2: Evaluate coverage needs

Take the time to assess your current insurance needs. Consider any changes in your bus’s usage, the number of passengers you deal with, or any additional coverage options you may require based on your business operations.

Step 3: Obtain insurance quotes

Request insurance quotes from multiple insurance providers to compare coverage options and premiums. This step will help you find the most suitable policy that aligns with your requirements and budget.

Step 4: Contact the current insurance provider

Reach out to your existing insurance company to inquire about the renewal process and the available options. They may offer you a renewal quote based on your previous policy.

Step 5: Provide updated information

Update the insurance company with any relevant changes in your bus’s usage, routes, or modifications made to the vehicle. Accurate information will ensure that your policy is tailored to your current needs.

Step 6: Verify No Claim Bonus (NCB)

If you have not filed any claims during the previous policy term, you may be eligible for NCB. Check with the insurance company if this bonus can be applied to your renewal premium for a discount.

Step 7: Fill out the renewal form

Complete the renewal form provided by the insurance company. Ensure that all information is accurate and up-to-date.

Step 8: Submit the necessary documents

Along with the renewal form, submit any additional documents required by the insurance company, such as vehicle registration, previous policy details, and proof of payment.

Step 9: Make the payment

Pay the renewal premium as per the agreed-upon terms. Some insurance companies offer online payment options for added convenience. Once the payment is processed, you will receive the renewed insurance policy document. Review it carefully to ensure that all the details are correct.

Step 10: Maintain updated records

Keep a copy of the renewed policy and all related documents in a safe and easily accessible place.

By following these steps and renewing bus insurance on time, you can ensure continuous coverage and protect yourself and your business from potential risks and liabilities.

How is Bus Insurance Different From Private Car Insurance?

Parameter Bus Insurance Private Car Insurance
Vehicle Usage Primarily used for transporting passengers or goods for commercial purposes Primarily used for personal transportation and commuting
Coverage Scope Typically offers comprehensive coverage, including third-party liabilities, passenger protection, and damage to the insured bus Typically provides coverage for accidents, theft, and third-party liabilities (Additional coverage may be optional)
Passenger Protection May include coverage for passengers in case of injuries or accidental death during transit. Some policies may offer limited passenger coverage, but it is often an optional add-on.
Vehicle Types Covered Can be tailored for school buses, public transport buses, commercial buses, and more. Covers cars used for personal transportation and may not apply to commercial or business-related vehicles.
Premium Costs Premiums are generally higher due to the increased risk associated with commercial usage and transportation of passengers Comparatively lower premium, since personal usage is considered less risky
Policy Add-ons and Customization Can be customized to suit specific commercial needs, such as additional coverage for goods in transit or specific business-related risks Offer a few add-ons, such as zero depreciation cover or roadside assistance, but customization options are relatively limited
Commercial Usage Considerations May require additional documentation and safety standards for commercial operations, such as permits and driver qualifications Typically based on the driver’s personal history, age, and driving habits
Legal Requirements Legally required for all buses operating on public roads in India
Claims Processing May involve more complex procedures due to multiple passengers and potential third-party involvement in accidents Claims are usually straightforward since they involve individual car owners and drivers

Note: The table above provides a general comparison between bus insurance and private car insurance. Specific policy features and coverage may vary depending on the insurance provider and the chosen policy type. 

Factors to be Considered Before Buying Bus Insurance 

Before buying bus vehicle insurance, you should consider several crucial factors to ensure adequate coverage for their needs. These include:

  • Type of bus

Different types of buses may have varying insurance requirements and coverage needs, which is why you need to determine the specific type of bus you own – a school bus, public transport bus, commercial bus, or private charter bus. 

  • Bus usage

Consider the primary use of the bus, whether it’s for daily commuting, long-distance travel, transporting passengers, or carrying goods. The insurance policy should align with the bus’s intended purpose.

  • Coverage type

Choose between third-party liability insurance or comprehensive bus insurance. Third-party liability insurance is the minimum legal requirement, while comprehensive coverage offers broader protection, including damages to the insured bus.

  • Insurance premium

Compare insurance premiums from different providers to find competitive rates that fit within your budget. Consider the coverage offered in relation to the premium to ensure it provides value for money.

  • Claim settlement ratio

Research the claim settlement ratio of insurance companies. A higher claim settlement ratio indicates the company’s efficiency in settling claims and providing support during critical times.

  • Add-on coverage options

Explore additional coverage options or add-ons offered by insurance companies, such as coverage for bus accessories, engine protection, or roadside assistance. Choose add-ons that address specific risks faced by your bus.

  • Insured Declared Value (IDV)

For comprehensive policies, check the IDV, which is the maximum sum assured in case of total loss or theft. Ensure that the IDV is appropriate for your bus’s current market value.

  • Exclusions and limitations

Review the policy’s exclusions and limitations to understand what is not covered. Be aware of any specific scenarios where the insurance policy may not provide financial protection.

  • Financial stability

Evaluate the financial stability of the insurance company. A financially strong insurer is more likely to meet its obligations and settle claims promptly.

How to Compare Bus Insurance Online? 

Comparing bus insurance policies online can be a convenient and effective way to find the best coverage that suits your specific needs. Here’s a step-by-step guide on how to compare bus insurance online:

  • Start by identifying reputable insurance comparison websites or aggregator platforms that offer multiple insurance quotes from various providers. You can also visit the official websites of insurance companies to compare multiple policies that they offer.
  • Fill out the required information on the comparison website. Provide accurate details about your bus, such as its make, model, year of manufacture, registration number, and the type of insurance coverage you require (third-party or comprehensive).
  • Select the specific coverage requirements you need for your bus. Decide whether you want additional add-ons or passenger coverage, and specify any other customization preferences.
  • Once you submit the information, the comparison websites will generate a list of insurance quotes from multiple providers. Carefully review and compare the different quotes based on their coverage, premium costs, and additional benefits.
  • Go through the coverage details of each policy to understand the extent of protection offered. Look for comprehensive coverage, inclusions, exclusions, and any special features or add-ons.
  • Compare the premium costs with the coverage offered. Ensure that the policy strikes the right balance between affordable premiums and adequate coverage for your bus.
  • Look for customer reviews and ratings of the insurance providers to gauge their reputation and customer service quality. Positive reviews and high ratings may indicate higher customer satisfaction.
  • Verify the claim settlement ratio of the insurance companies. A higher claim settlement ratio indicates the company’s efficiency in settling claims promptly.
  • If you require additional coverage options, compare the availability and cost of various add-ons offered by different insurers. Choose add-ons that address your specific needs.
  • Conduct some research on the background and financial stability of the insurance companies shortlisted. A financially stable insurer ensures timely claim settlements.
  • Check for any discounts or special offers provided by insurers that can help you save on premiums without compromising on coverage.
  • Before making a final decision, read the policy wordings of the shortlisted plans thoroughly. Understand the terms and conditions, exclusions, and limitations to avoid any surprises later on.
  • If you have any doubts or need further information, contact the insurers directly to clarify your queries.


Is bus insurance mandatory in India? 

Yes, buying bus insurance is mandatory in India as per the Motor Vehicles Act, 1988. All buses operating on public roads must have at least third-party liability insurance, which covers damages to third-party property or injuries caused by the insured bus.

What types of buses are covered under bus insurance policies? 

Bus insurance policies cover various types of buses, including school buses, public transport buses, commercial buses, private charter buses, and tourist buses. The coverage may vary depending on the insurance provider and the chosen policy type.

Can I get coverage for the passengers traveling in my bus? 

Some comprehensive bus insurance policies offer coverage for passengers traveling on the insured bus. This coverage provides financial support for medical expenses or compensation in case of accidental death or injury to passengers during transit.

Can I add additional coverage options to my bus insurance policy? 

You can customize their insurance policies by adding additional coverage options known as add-ons. These add-ons include coverage for bus accessories, engine protection, roadside assistance, and more. Adding relevant add-ons can enhance the overall protection offered by the policy.

How can I reduce the bus vehicle insurance premium? 

To reduce your bus insurance premium, you can consider the following:

  • Opt for a higher voluntary deductible (out-of-pocket expense during claims)
  • Install safety features and anti-theft devices in the bus
  • Accumulate NCB by not making any claims in the previous policy term
  • Compare quotes from multiple insurers to find competitive premiums

Can I transfer my existing bus insurance policy to a new vehicle? 

Bus insurance policies are generally non-transferable between vehicles. If you purchase a new bus, you will need to buy a fresh insurance policy for the new vehicle. However, you may retain the No Claim Bonus (NCB) earned on the previous policy by providing the required documents to the new insurer.

Note that these FAQs provide general information about bus insurance in India. Specific terms and conditions may vary based on the insurance provider and the policy type.


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