When you buy a new vehicle, it comes with an insurance cover as it is mandatory to have a motor insurance – at least a third-party insurance – in India. This insurance cover is annual in nature, and has to be renewed every year. But, did you know that more than 2/3rd of motor insurance – whether for two-wheelers or four-wheelers – in India does not get renewed on time and gets lapsed? This means that around 70% of two-wheeler drivers are out on the roads without an active policy. One of the main reasons for this is the yearly nature of the renewal, and there is no grace period on paying the renewal premium.
If you want your two-wheeler insurance to remain active all the time, you need to renew it before the last date and that too, every year. It does sound like a bit of a hassle, right? But the Insurance Regulatory and Development Authority of India (IRDAI), from September 2014, allows insurance companies to sell 2-year and 3-year policies to its customers. This means that you need to worry about premiums and renewal only once in 2 or 3 years.
Let us look at the advantages of a long-term third-party motor insurance:
- The premium payable is in a 3-year policy is thrice the usual annual amount. This amount does not change during the course of the policy. This means that the premiums can neither be hiked nor cut down, and also that the sum assured remains constant for all 3 years.
- The premiums for a long-term policy generally come with a discount of 20% to 30% of the usual annual premium on the own damage portion, as the tenure of the policy affords the insurance provider benefits that can be passed on to the customer.
- A 3-year policy also means that you do not have to get your vehicle inspected during the period for any change in the Insured Declared Value (IDV). A vehicle inspection is usually undertaken only if you fail to renew your policy on time and go for a renewal or new policy after a gap of even 1 day from your policy expiration.
- Under the long-term policy, you can get either a third-party liability insurance or a comprehensive insurance policy that covers your own damage as well. Either way, you will save on premium.
- As per IRDAI terms, the long-term policy, once issued, cannot be cancelled by the insurance provider for the duration of the policy. The only exception to this is if your vehicle suffers from total destruction.
- No Claims Bonus is also accrued in a long-term policy, but in a better than a regular annual policy. You could get up to 40% NCB at the end of 3 years compared to 35% in a 1-year policy. Many insurers also offer riders that keep the NCB intact if you make only 1 claim in the 3-year period.