We all are aware how frustrating it could get when we forget to pay our utility bills, credit card bills, or other dues on time. When our dues are outstanding for a longer time, we need to pay penalties, and sometimes there is also a risk of these services getting disrupted.
The difficulties of non-payment of dues are not only limited to loan-related products but also apply to other things such as your car insurance. Not renewing your motor insurance policy on time can lead you to a huge inconvenience. A car insurance policy is an annual contract that must be renewed every year to have a financial backup in times of unfortunate incidents involving your vehicle. It is always advisable to renew the policy before its expiry date to enjoy continued protection while on the road. In case you do not renew your policy on time, the policy becomes void and you need to buy a fresh policy from an insurer who is ready to cover your vehicle.
There are many people who do not give enough importance to a motor insurance policy and consider it a futile expense. They avoid renewing their policies as they believe they never get to use them. However, it is legally mandatory to buy a motor insurance policy as it has a significant value when it comes to protecting you against legal and financial liabilities that arise out of loss or damage to your vehicle or a third party. Also, there can be instances when you genuinely forget to renew your insurance policy. Whatever be the case, not having an active motor insurance policy can expose you to a huge amount of risk. In the absence of a motor insurance policy, the expenses on repair and retrieval of the car or the financial liabilities due to damage caused to a third person are to be fully borne by the owner of the vehicle.
A delay of one day in renewing your car insurance policy will result in the lapse of policy. However, if you wish to buy a third-party liability cover, the insurance company will allow you to do the same even after the lapse of your policy. But there is no way you can get coverage for any incident occurred during the time you did not have an active insurance policy. To buy a comprehensive insurance policy that offers you a greater coverage, the process gets a bit lengthy.
To renew a lapsed insurance policy, one has to fill up a fresh application akin to buying a new insurance policy. In such a case, the insurance company also inspects your vehicle to assess the pre-existing damages done to the car. While the insurer may issue a fresh insurance policy, it will never cover the already existing damages for any claims made in the future. Also, an insurance agency might charge a higher premium for a car whose insurance policy is expired or may even reject the application.
What Happens To The No Claim Bonus?
You might lose the benefits of No Claim Bonus (NCB) if your policy is not renewed on time. NCB is a discount on premium that an insurance company provides to its policyholders on making no claims on their policies in the preceding years. A person can get an NCB of up to 50% depending on the number of claim-free years. If your car remains uninsured for a period longer than 90 days, you may not avail the benefits of NCB. You can also not transfer the benefits of NCB to your new vehicle. This may result in a lost opportunity of saving on your car insurance premium.
Given the difficulties that one has to go through while renewing a motor insurance policy, it is always advisable to renew the policy before it expires to enjoy continued benefits of the same. These days, the insurance companies notify the policyholders regarding renewal of policy via SMS and email alerts. Buying or renewing a car insurance policy online has become a lot easier today as there are multiple third-party insurance portals where we can compare available car insurance policies and choose a policy that best fits our requirement.
To encourage vehicle owners to purchase and renew motor insurance policies on time, the Insurance Regulatory and Development Authority of India (IRDA) now allows the insurance companies to offer long-term policies for a period up to 3 years. Opting for a multi-year insurance policy can get you certain discounts and save you from the hassles of yearly policy renewals. If you are someone who finds it difficult to remember dates, a long-term insurance policy can be the best option to go for.
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GST Update: GST of 18% is applicable on car insurance effective from the 1st of July, 2017