Why is an on-time renewal of car insurance policy important?
My friend Vinay was a very methodical person. He always did his things on time without fail. That is why when it came to renewing his car insurance policy, I was surprised to find that he had a procrastinating nature. Over a cup of coffee one day, he mentioned how he was on a business trip overseas when his car insurance policy lapsed. He had a harrowing time getting the policy renewed. I heard him narrate his experience when a thought struck me. How many of us do timely renewals of our car insurance policies?
A car insurance plan is a quintessential part of our car as it is mandated by law. All car insurance policies come with a term of one year after which they require renewals. It is at the time of renewals that most of us dilly-dally. This dilly-dallying is not wise. On-time renewal of car insurance policies is important. Here’s why:
Expired car insurance policy is a legal offence
The Motor Vehicles Act, 1988 has mandated every vehicle to have an active insurance cover if it is being driven on Indian roads. As such, when your car insurance policy expires, the cover becomes inactive. Driving a car without a valid insurance cover is a legal offence. If you are caught violating the law you would face heavy penalties. So, to avoid being entangled in legal violations, your car should have a valid insurance cover at all times.
You shoulder the financial risk of any damages caused or suffered
Your car insurance policy covers you against any financial liability you incur when your car causes bodily injury to any third party or damages any third party property. Moreover, any injuries suffered by you or any damages faced by your car are also covered under a comprehensive car insurance plan. Thus, you are free from any financial obligation which might arise out of possible accidents and mishaps. If your car insurance policy expires, the coverage ceases. In that case, you would be financially liable to pay for any damages caused to third parties or any damages suffered by you. These financial liabilities are considerable. So, to protect your pockets from such heavy financial liabilities, on-time renewals are insisted upon.
Read more 5 consequences of driving without car insurance
You have to take the hassle of getting the vehicle inspected
In case of renewal of expired car insurance policies, insurance companies insist on inspection of the vehicle before the new policy is issued. This inspection involves a surveyor visiting your place, carrying out your car’s inspection, submitting the inspection report, scrutiny of the report and issuance of a fresh policy if the report is satisfactory. All this inspection not only takes time, it is also inconvenient. Inspection can, thus, be avoided if you continue the insurance cover without a break.
The subsequent premiums might be higher
Whenever you renew your car insurance policy, you are always asked whether your earlier policy has expired or not. This question is asked to determine your premium. Policies which are renewed timely have lower premiums than policies which are not. That is why, when you mention that your existing policy has lapsed, you might be required to part with higher premiums.
Read more to understand car insurance terminologies
There is a fear of losing out on the accumulated NCB discount
Each year, when you do not make any claim in your car insurance plan, you get a No Claim Bonus discount in the next year’s renewal premium. This discount is cumulative in nature. It increases every consecutive year if no claim is made. After the first claim-free year you get a discount of 20%. After the second year it increases to 25%, then to 35% and so on. If you do not make a claim for 5 successive years you get a discount of 50%. This discount can be earned if your policy is renewed on time. In case your policy has expired and you do not renew it within 90 days from the date of expiry, you lose the entire accumulated NCB discount. As such, you not only pay a higher premium for renewing a lapsed policy, you also lose out on the discount.
Read more about No claim bonus in car insurance
On-time renewals, therefore, are necessary both from the legal and financial point of view. They are legally necessary and financially rewarding too. So, be punctual. Don’t let your car insurance policy lapse. Renew it on time and enjoy the benefits. Here are some tips on car insurance renewals.
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