Role of grace period in insurance policy renewal

Posted on: Mar 1, 2022 | | Written by:

Role of grace period in insurance policy renewal

Published on March 1, 2022. EST READ TIME: 3 minutes

All insurance policies come with a specific validity period and need to be renewed from time to time. So, if you are looking to protect your bike always, you must adhere to the bike insurance renewal deadlines. Insurance companies tend to send multiple reminders when the 45 days renewal window for your policy opens. Yet, in many cases, you might fail to renew your bike insurance because of a variety of reasons, like shortage of money, too much to do at work or home, or just sheer lethargy. Keeping that in mind, insurance companies and government regulators have come up with the concept of grace period over and above the insurance validity, during which you can renew your policy without any negative consequences. To know more about it, read on.

The basic concept of bike insurance renewal grace period

Grace period can be considered as the special timeframe you get during which you can renew your bike insurance policy even after it has expired. Insurance companies also ensure that the potential impact of your failure to renew the policy on time stays minimal. You can think of grace period like a special favour that insurance companies show their clients. However, it is important to note that grace period is not an extension on your policy in any manner. Once the expiry date of your policy is past, it can no longer protect you. The grace period that follows is just a window during which your policy can be renewed. When you renew your policy during the grace period, you either don’t have to pay any fine or the fine is nominal.

What are the consequences of riding your bike with an expired insurance policy?

A valid insurance policy is a legal requirement for any person who wants to drive a vehicle on a public road in India. This legal requirement specifies that unless a person is driving a vehicle with at least a third-party cover, they will be liable for a challan by the traffic police. This challan can be up to INR 2000 and may or may not be accompanied by imprisonment of up to three months if a judge deems it necessary.

Is a vehicle inspection necessary if policy is being renewed during the grace period?

Vehicle inspection is the way for insurance companies to stay up to date with the condition of the bike being insured. As long as the insurance policy remains valid, the insurance company remains liable for its protection. But once the policy expires, they need to check the vehicle they are insuring. As a rule of thumb, it is best to go for bike insurance renewal while your current policy is valid. If your policy expires and you enter the grace period, you will need to get your vehicle inspected again.

What happens to the No Claims Bonus if the policy is in grace period?

The No Claims Bonus is something that insurance companies offer to incentivise people who care about responsible driving and do not need to make frequent claims. In five years, you can get a No Claims Bonus of as much as 50%, which will translate to a discount on the premium price of your own damage cover. If you let your policy expire and go into the grace period, the No Claims Bonus also goes into abeyance for a duration of 90 days. If you can renew your policy within this 90-day period, your NCB continues as is. Otherwise, the NCB gets back to zero, and you have to wait for one claim-free year before it can go up to 10% at least.

Renewal options for your policy during the grace period

You can choose to renew your policy online or offline during the grace period. The best approach is to go through the insurer’s website for bike insurance renewal. Websites have the best pricing choices as well as the best add-ons for you to choose from. Similarly, the policy is also available instantly when you are looking to renew in a hurry. All in all, don’t wait for the grace period to kick in. Renew your bike insurance when the 45-day before-expiry insurance renewal window opens. That way, you will have the peace of mind you need.

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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