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Everything About Multi-Year Car Insurance Policy

Published On Mar 16, 2021 10:00 AM By InsuranceDekho

A basic third-party car insurance policy is mandatory for all cars plying on Indian roads as per the Indian Motor Act Tariff. However, a basic third-party car insurance plan protects you only against third-party liabilities and does not provide any coverage for own-damages sustained by your car.

Every car insurance comes with a validity period after which it gets expired and needs to be renewed. Car insurance policies are available with short-term validity of 1 year as well as long-term or multi-year validity of 3 to 5 years.

According to the Indian Motor Tariff, every new car in the country is mandatorily required to own at least a 3-year third-party car insurance in order to remain legally compliant. Old car owners are free to choose between 1-year and 3-years car insurance policies. You can opt for a standalone own-damage car insurance plan of 1 or 3 years with a 3-year third party or can also go with a 3-year comprehensive car insurance plan as per your insurance requirements and budget.

Everything About Multi-Year Car Insurance Policy

Introduction of Multi-Year Car Insurance Policy

Traditionally, the validity for any car insurance has been for an amount of 1 year from policy issue date. However, the Supreme Court mandated that each new motor insurance policy should get a third-party liability cover for 3 years. It brought in this to bring larger motor insurance penetration and help improve the situation of car insurance accident victims.

Advantages of Multi-Year Car Insurance Policy

Following are the key benefits of owning a multi-year car insurance plan - 

  1. Convenience: When you purchase a multi-year car insurance plan, you save yourself from the hassle of yearly renewals and add to your convenience. This also reduces the risk of missing on annual renewal dates of your car insurance policies which can result in loss of NCB and/or inspection of the car.

  2. Minimal Compliance Issues: As discussed before, a 3-year car insurance policy is a mandatory requirement for all new car owners and thus helps them to remain compliant with the law and avoid compliance issues.

  3. Protection From Value Hikes: The premium price of third-party insurance is revised each year by the IRDAI, and over time this may get a high ticket. By getting a long-run car insurance policy, you can lock in on a set premium for 3 years and save 20-40% on annual renewals for a third-party policy. 

  4. Additional Discounts: Insurance providers often offer a reduction in the premium amount of a three years car insurance plan. 

  5. Transfer of NCB: Anytime throughout the term of the policy, if you sell your car or purchase a brand new one, you can transfer your accumulated no claim bonus (NCB) to your new car and reap the advantages of discounted future premiums.


A multi-year car insurance policy has only advantages to offer and no drawbacks. The payment of the car insurance premium for 3 years in one go may initially sound like a bad idea to you but careful assessment of the benefits offered by it, makes it worth a purchase. 

Disclaimer: This article is issued in the 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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