Importance of Timely Renewal of Car Insurance Policy
Updated On Oct 16, 2023
Car insurance policy renewal on time is important for multiple reasons. Read this article to know about those reasons.
Table of Contents
Every car insurance plan comes with a term of validity after which it will have to renew regularly to keep it active. Hence, it becomes significant to renew your car insurance before its expiry date. You can set alarms to not miss the deadline, however, insurance companies also send reminder messages to recall you of the renewal deadline. But, have you ever thought that what is the importance of renewing the car insurance policy in a timely? Let’s discuss some of its reasons.
Reasons to Renew Your Car Insurance Policy On Time
Here are some reasons why you should renew your car insurance plan on time:
1. To Comply With Motor Laws
Every car owner should carry a valid and active car insurance plan with at least a third party cover, as per the Indian Motor Tariff. It means that you must hold active car insurance all the time while driving a car. Failing to renew your plan on time will make your insurance plan inactive that will make your driving illegal as driving a car with an expired policy is considered a violation of traffic laws. If you get caught by the police for driving a car without an active insurance plan, you can be charged with Rs. 2,000 and/or imprisonment for a maximum of up to three months.
2. Keeps the Coverage Active
A car insurance plan gives coverage in the form of several benefits and add-on covers like No Claim Bonus (NCB), cashless repair feature, zero depreciation cover, and so on. This coverage will be available till your policy remains active. Therefore, you need to own an active policy cover to keep availing of these benefits for which you will have to continue renewing your plan on time. Failing to renew your car insurance plan on time will break your coverage and your insurer will not remain liable to cover your financial liabilities arising out of your insured car.
3. Prevents Increase in Premium
If you fail to renew your car insurance policy, then the break can lead to an increase in your premium. It can happen as you will have to purchase a car insurance policy from scratch that can lead to an increase in your expense. In addition to this, the insurer will increase your premium when they get to know about your expired policy. Also, with the policy expiration, you will also lose your NCB that could have reduced your insurance premiums, if you had renewed your policy on time.
4. Intacts the No Claim Bonus
Every car insurance company rewards its policyholders for not making any claim in a policy year with a reward known as No Claim Bonus (NCB). This benefit gets accumulated with consecutive claim-free years that range from 20% up to 50% after five continuous policy years. You will get a premium discount equals to the NCB percentage gain. However, insurance companies give a grace period of 90 days after the expiry date to renew your plan, but the NCB stays intact only till that period. If your policy gets expired, you can lose your No Claim Bonus (NCB) benefit.
5. Ensures Smooth Policy Renewal
When you get your car insurance policy renewed timely, in such cases, your car is not subject to any claim inspection and the whole renewal process becomes hassle-free. But, in case you fail to renew your plan timely, you are looking up to being a careless car owner by your insurer and wants to inspect your car when you request to renew the car that can create an unnecessary problem for you and can also discover some damages or wear and tear of your car that can end up reduce your car’s Insured Declared Value (IDV) or increasing the premium.
The timely renewal of car insurance is significant for multiple reasons. The policy lapse will create unnecessary hassle with the termination of coverage to an increase in your policy premium for the next plan. Here are some points in this article to help you know why you should renew your car insurance on time.
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.