Renew your long-term car insurance on time for maximum benefits

Posted on: Sep 23, 2021 | | Written by:

Renew your long-term car insurance on time for maximum benefits

Published on September 22, 2021. EST READ TIME: 3 minutes

You must have car insurance, especially third-party liability insurance, if you wish to drive legally on Indian roads. Apart from the legal aspect, car insurance plays a crucial part in car ownership, covering policyholders against financial risk in case of an accident. Car insurance comes with a defined period of validity, from the usual one-year period to the long-term 3-year period. The own damage cover, however, comes in single-year validity only, currently, requiring annual renewal.

Failure to renew your policy, pushes you to the wrong side of the law, and strips you of the protective benefits that insurance has to offer. So, here’s why you must renew your long-term car insurance before it expires:

1. Legal penalties

Driving without car insurance attracts a penalty, and even jail time. Insurance papers are one of the most common things that a policeman will check in case of any misdemeanour, such as going down the wrong path, breaking a traffic signal, dysfunctional headlamps, etc. On seeing that you do not have insurance, they will issue a fine, and on repeat offences, you could face jail time as well.

2. Financial risk

A 2018 Supreme Court committee observed that nearly 66% of cars on Indian roads did not have insurance coverage. This is unfortunate, given the collective nature of risk when driving publicly. Even if it is not your fault, you might still get involved in an accident. In such cases, the other person’s third-party insurance will kickin and help pay for the damage to your vehicle. But if the other vehicle is not insured, you might end up paying for the damage, out of your own pocket.

Consider another scenario, where you are at fault, but do not have insurance. You will be obligated to pay for the other person’s damages, while also tending to your own.And finally, in case of death as a result of an accident, the aggrieved family may not get adequate compensation if the at-fault party does not have insurance.

Remember that while accidents happen without any prior notice, the financial implication can be huge. So, not planning for such expenses can ruin your financial health and disrupt your mental health as well. That is why it is crucial for you to be insured always.

3. Car inspection

The renewal process of car insurance is extremely simple. Simply log onto your insurer’s website, select the plan, enter basic details, and make the payment. It won’t take more than 10 minutes. However, if you allow your policy to expire, you will need to make a fresh application. During this application phase, you will be required to re-submit all your documents, and may be subjected to a car inspection by the insurer as well. This can be time-consuming and inconvenient.

4. Higher premium

The timely renewal of policies can get you discounts, especially if you have comprehensive car insurance. With a fresh policy, especially after you let a previous policy expire, your application will be scrutinized, and a higher premium will be charged since the insurer will perceive you as ‘risky’ or ‘unreliable’.

5. Loss of NCB

Comprehensive car insurance policy holders enjoy No Claim Bonus (NCB) discounts for every claim-free year. This discount on premium,which accumulates every claim-free year and upto 50% in 5 years, will be reset to zero if you fail to renew your policy on time. You get a grace period of 90 days after the date of policy expiry, to preserve your accumulated NCB.

Conclusion

To wrap up, if you want to abide by law, availing long-term carinsurance,especially the third-party liability kind, is a good bet. Moreover, this way, you can avoid the hassle of yearly renewal.Furthermore, you get to protect yourself against price hikes that may happen in the subsequent years. And if you go for a comprehensive policy, which is highly recommended, you will be able to cover the damages done to your own vehicle as well, in case of an accident, fire or natural calamity.

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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