Drive worry-free with multi-year long-term car insurance

Posted on: Sep 29, 2021 | | Written by:

Drive worry-free with multi-year long-term car insurance

Published on September 29, 2021. EST READ TIME: 4 minutes

There was a time when you had to purchase insurance policies on an annual basis. Every year, when it was time to renew car insurance, you had to visit the insurance company or an agent and give them relevant information and premium amount. The company then gave you a policy for one more year. Though this traditional model was working back then, it had many problems:

1. People tended to simply forget renewal dates and their policy lapsed

2. They tended to skip insurance renewal because of non-availability of funds when needed

3. People also chose to let their policy lapse in the hope of tax reductions etc. Luckily, now, things have become much better with long-term car insurance. To know why, read on.

Understanding the concept of a multi-year insurance policy

Back in those days when people had the option to buy only annual policies, they used to forget to renew the same. And often, while driving without insurance, they used to get caught by the traffic police. Which means, they had to pay massive challans. In order to solve this problem, the concept of a multi-year long-term car insurance was introduced.

This plan allows you to buy policies that last up to 3 years before you need to renew them. For a new car purchase, the multi-year car insurance comes with 3 years of third-party cover and 1year of own damage cover. Once the first year is over, you can buy ‘own damage cover’ for two years. After three years, you have the choice to get single year or multi-year car insurance. With this new model, you get:

Up to three years of third-party cover, which takes care of your legal liability for the entire duration of the policy.
Up to three years of Personal Accident Cover of Rs 15 lakhs, as mandated by the IRDAI, to cover hospitalisation, disability and death.
Up to three years of own damage cover, which will cover any losses because of accident, natural calamity, or vehicle theft.
If you choose any add-ons, for example zero depreciation cover or emergency road-side assistance, they will also last for the same duration.

Key benefits that come with multi-year insurance

There are multiple reasons why you should choose a multi-year long-term car insurance policy rather than the traditional single year plan.

1. A long-term car insurance policy is way more convenient than any kind of single year plan. It eliminates the need to track your insurance policy on a regular basis. This especially helps if you own multiple vehicles as tracking multiple policies can be challenging. Multi-year insurance makes things simple because you take the policy once and then you don’t need to worry for a long time.

2. With a single-year car insurance plan, you need to account for the fact that the prices of third-party cover are regulated by the IRDAI and get updated on a frequent basis. Generally, the price of third-party cover tends to go up. This means that every year you pay increased prices in case of a single-year policy. But having a multi-year long-term car insurance policy means you buy third-party cover for multiple years at today's prices.

3. Like the price of third-party cover, taxes too tend to rise on a regular basis. And when you buy an insurance policy, you still need to pay Goods and Services Tax at the prevalent prices. In case of a single year policy, you pay increased taxes every year. With multi-year insurance, you don’t need to worry about a tax rise because you pay GST for many years at current prices only.

4. As with all other aspects of insurance, your ‘own damage cover’ is also subject to the fact that inflation has its impact on everything. The car insurance premium of own damage cover also tends to increase over time, but when you buy long-term car insurance, you can circumvent the inflation by locking in prices for multiple years in one go.

5. Insurance companies use No Claim Bonus or NCB to promote safe driving habits among people. Generally, the NCB is calculated on a year to year basis, where you collect more and more NCB every year during which you file no claim. With a multi-year policy, you get the applicable tier NCB in one go. You don’t need to wait for a year on year model to accrue the NCB.

6. When you buy multi-year insurance, you get an adequate policy now and stay stress-free for three years. Which means, you don’t have to worry about having enough money next year for the renewal. Plus, you get more time to save money for the next renewal, after three years.

All in all, when you buy a multi-year long-term car insurance policy, you get to save a lot of money and a lot of hassle. So, compare insurers now and zero in on a policy that suits your needs the best.

Disclaimer: The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales.

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