Things to Know About Multi Year Car Insurance Policy in India

Multi Year Car Insurance Policy In India - As per the Indian Motor Tariff 2002, it is mandatory for new car owners to get a 3 year third party car insurance policy for being able to drive on the Indian streets. Apart from helping you fulfill the legal requirement, a multi-year car insurance offers you convenience in the sense that you need not go through all the hassles of documentation and verification each year. Another benefit of a long-term policy is that it enables you save your money by featuring good discounts.


This means that whenever you are buying a new vehicle, you are required to buy a long-term policy having third party coverage. While for a new car, the minimum term period is 3 years, for a new two-wheeler, it is a minimum of 5 years. However, this mandatory rule is not declared for a comprehensive car insurance policy. People seeking a comprehensive OD (own damage) car insurance policy for getting financial coverage against damages caused to themselves and their vehicle, can either go for the yearly plan of the same or buy a multi-year plan.

Why Should I Buy a Multi-Year Third Party Car Insurance Policy?

As mentioned earlier, buying a multi-year third party policy is mandatory while buying a new car. Though you can buy such policy from the car dealership itself, it is always recommended to compare different motor insurance plans online to get the best deal.

When it comes to old cars, owners often tend to buy yearly policies. However, it could be a better idea to opt for a multi-year policy for old cars as well. Though you might have to shell out a higher premium amount at the moment, but it could reward you with multiple benefits in a long term. Below are a few benefits of buying multi-year insurance plans.

Benefits of a Multi-Year Car Insurance Policy

Having a multi-year third party insurance policy comes with a number of benefits, the primary being providing you with a financial backup for a longer period of time.

1. No need to rush for renewing policy every year

It is true that the one-time premium charge of your multi-year car insurance policy will be higher in comparison to buying or renewing it every year. However, you are relieved from renewing it yearly. If you pay for your insurance policy collectively in advance, you would be having the freedom to continue enjoying the benefits of the insurance policy of your vehicle for many years together.

2. Escape the price hike

The Indian government raises the premium amount of your third party car insurance policy every financial year. This makes the premium amount of a particular year greater than the previous year’s amount, thus making the policyholder pay out greater sums than he or she did last year. This problem is dealt with if you have a multi-year car insurance policy.

3. Discount on multi-year policies

While buying a multi-year motor insurance policy, you might get a discount since you are paying three years’ premium at once, chances are that the company would reward you with a significant discount.

How Much Should I Pay for My Long-Term Third Party Only Car Insurance Policy?

As per the IRDAI (Insurance Regulatory and Development Authority of India), the premium amount of the car insurance policy depends upon the cubic capacity of your vehicle. Here is a comparative study of the premium amounts for each stage of the engine capacity of your car.

Capacity of the Engine

Multi-Year Third Party Car Insurance Premium (in Rs.)

Less than 1000 cc

5,286

> 1000 cc but < 1500 cc

9,534

> 1500 cc

24,305

The total premium amount is estimated by dividing the yearly premium by the coverage duration and adding it with the rest of the premium deposit.

Policyholders must, however, keep in mind that they cannot cancel the subscription for a third party cover during its term period, except in cases of double insurance or in case you no longer use your car, either because you have sold it or because you have transferred the ownership to someone else.

Types of Multi-Year Car Insurance Policy

As per the Supreme Court verdict, you can take any of the below-mentioned three options for getting a car insurance policy for a long-term:

  • Option 1- Long-Term Third Party Only Cover: You can buy only a third party insurance policy for three years which is compulsory without an OD coverage.
  • Option 2- Long-Term Comprehensive Cover: You can purchase a comprehensive plan for a period of 3 years, along with a compulsory third party cover for the same period of time.
  • Option 3- 1 Year Comprehensive Cover: You can purchase a comprehensive car insurance policy for 1 year along with a third party liability policy for 3 years. This is often the preferred choice for most car owners.

Type of Policy Cover

Number of Years for TP

Number of Years for OD

Long-Term Third Party Only Cover

3 years

NA

Long-Term Comprehensive Cover

3 years

3 years

1 Year Comprehensive Cover

3 years

1 year

(Data as of October 2019)

Reach out yo your car insurance company for registering yourself to a long-term insurance policy. Different companies offer different premium rates separately for third party and comprehensive coverages depending on a number of factors, the primary being the cubic capacity of your vehicle. Compare the terms and conditions associated with various companies and check which policy would best meet your personal and financial requirements, and then go for a suitable one. Most of the car insurance companies today allow you to apply for a policy online through their hassle-free web portals. This makes the procedure smoother and faster, and also much cost-effective since they won’t have to pay any agents or consultants.

For further reading:

Car Insurance Consumable Cover Add-On

Understand A Ideal Car Insurance Coverage

So if you are planning to buy a new car recently, then make sure that it is not only legally mandatory to have a multi-year third party car insurance policy, but also to make you have more comfortable driving experience.

Disclaimer: This article is issued in general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.

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