The financial year has just ended. If you’ve had a good year, you must have high hopes as far as the annual appraisals are concerned. So if everything goes as per plan, is a swanky new car on your to-buy list? Or do you fancy a cruiser bike? If you are planning to purchase a new vehicle, gear up to buy a mandatory long-term insurance policy along with it.
What’s a long-term insurance policy?
A policy which is issued for more than one year. Earlier on, you could insure your vehicle just for a year. But now, the rules have changed.
What’s the new rule?
The new rule states that every new vehicle needs to be insured with a long-term policy. This change has been made by Insurance Regulatory and Development Authority of India – IRDAI, which is the apex insurance body in the country.
If you purchase a car today, you will have, in one go, insure it for a period of three years. A bike, for five years straight. Note that this rule is applicable for the basic third-party liability policy.
What if I want to choose a comprehensive long-term policy?
You are free to purchase a comprehensive car insurance or two-wheeler insurance for long term as well. In fact, it will provide you with extensive insurance coverage and suitable add-ons. Yes, it will be costlier compared to a bare-minimum third-party liability policy, however, it offers own damage cover and includes the benefits of a third-party liability policy as well as a basic personal accident cover.
Is this new rule a good thing?
From an administrative perspective, it is a good thing as new vehicles will be insured straight away for a long period of time. That means, no more remembering to renew policies, thus reducing financial losses arising due to vehicle-related unfortunate events. Note that your insurance policy will not cover losses faced when you were uninsured.
From a vehicle owner’s point of view, it is mandatory to insure your vehicle if you want to drive/ride on Indian roads. This insures that your policy stays active for a long period of time without annual renewal. Thus eliminating the tension of timely renewals.
By purchasing a long-term policy, you ensure that the policy stays active automatically for a longer period of time. Also, you stay immune to any annual price-rise regarding third-party insurance as you pay for long-term based on the price prevalent while purchasing the policy.
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