Grace Period in Car Insurance & Its Importance

Posted on: Oct 20, 2023 | | Written by:

Grace Period in Car Insurance & Its Importance

Published on October 19, 2023 EST READ TIME: 3 MIN

A car insurance policy is a mandatory document to drive legally in India. Your car needs at least a third party car insurance as per the Motors Act of 1961. However, depending on your requirements, you may even go for comprehensive insurance . It offers all-around coverage along with the legal formalities of minimum car insurance coverage.

Car insurance is purchased for a specific period, say 1 year. A sum of premium is charged in return for the comprehensive coverages offered under the car insurance policy. Hence, to continue availing the services, you need to renew your car insurance before it expires.

Your insurer, like HDFC ERGO, sends notifications and reminders as well before the expiry date so you do not miss out on renewing the policy. Once the policy terminates, you will have to purchase the plan again to renew services.

What is the grace period for car insurance?

The car insurance grace period is the buffer time offered by the insurance company to renew your car insurance policy. The grace period begins after the renewal time of your motor policy has expired. In case you have accumulated no claim bonus during the policy year and want to use it during policy renewal, you can still use it during the grace period.

One important thing to know is you cannot raise any motor insurance claim during the grace period. This is because the grace period is simply offered to help you retain the policy services and renew the policy. It does not allow raising claims since the actual renewal time of the policy has expired. So, in case you missed renewing the policy before its expiry, make sure to renew it by the grace period to avoid further hassles.

The unforeseen situations, accidents, and damage to your vehicle can be overwhelming and sometimes quite expensive. So, maintaining car insurance all the time gives you the leverage of a financial backup. Hence, it is advised to always keep your car insurance active.

What is the duration of the grace period in car insurance?

Car insurance grace period may differ from one insurance company to another. At HDFC ERGO, you may get a grace period of up to 90 days. This means that once your car insurance policy has expired, you need to renew it within 3 months to continue availing the services.

In case you even miss the grace period, the policy gets terminated. Now, in order to begin the policy services again, you will have to purchase the car insurance again. You will also lose the no-claim bonus after the grace period ends. So, a grace period can be taken as the final call before the termination of the motor policy.

Benefits of renewing car insurance within the grace period

So far, you may have realised the value of the grace period as the final chance of renewing your car insurance policy. There are certain benefits of renewing the car insurance coverage within the grace period. These are:

1. An active car insurance plan

The grace period means the actual renewal time of your car insurance has expired. Hence, during the grace period, your car remains out of the coverage of the car insurance policy, so you cannot raise a claim. However, you still have the option to quickly renew the plan and keep your insurance plan active.

The grace period of 90 days with HDFC ensures that the policyholder gets sufficient time to renew the plan without losing benefits.

2. No claim bonus remains intact

No claim bonus can be very helpful. It can help you get discounts on the renewal premium amount up to 50%. In order to avail the benefit of the no-claim bonus, you need to renew your car insurance on time. Even during the grace period, the no-claim bonus remains intact, and you can use it.

Once the 90-day grace period ends, you lose the accrued NCB even if you switch to another car insurance company.

3. Same premium rate

When you renew a car insurance policy on time, you get to enjoy certain discounts and offers. Some of these are still available during the grace period. So, this is another benefit of renewing car insurance during the grace period.

However, if you choose to renew the plan after the policy gets terminated, the premium rate will typically increase. Until the grace period, the premium remains the same.

4. A legal formality

As per the Motors Act of 1961, having a minimum of third-party car insurance is mandatory to legally drive the vehicle. So, if you do not have an active car insurance plan, you may unnecessarily have to pay penalties and do legalities. To avoid all of this, it is better to renew the plan on time.

FAQs

1. What is the grace period duration?

At HDFC ERGO, a grace period of 90 days is offered to renew your car insurance. However, in general, the grace period may range between 30-90 days for various insurance companies.

2. What happens if I do not renew my car insurance during the grace period?

A grace period of 90 days is the final call for renewal before the policy ends. So, if a policyholder fails to renew the car insurance even during the grace period, the policy gets terminated. In case your car suffers an accident, you will not be able to make a claim even if you are in the grace period.

3. Can I renew my car insurance after the grace period ends?

Yes. You can renew the car insurance policy after the grace period is over. However, the premium rate charged may be higher, and you will also lose the accumulated benefits like no claim bonus.

4. Can I raise a claim during the grace period?

No. You cannot raise a car insurance claim during the grace period. It is the extended time offered only for the renewal of the policy. Once you have renewed the plan, you can begin raising claims.

Conclusion

Renewing car insurance policies has become a matter of a few clicks. You can easily renew the policy online at your comfort. So, the sooner you do it, the better it is. Losing on car insurance only creates further problems, including legal ones. You again have to go through the car insurance purchasing process, and that, too, maybe with an increased premium. Avoid all these problems and stay covered with your preferred car insurance plan.

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

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