What Happens If I Let My Comprehensive Car Insurance Policy Lapse?
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Home / Car Insurance / What happens if I let my comprehensive car insurance policy lapse?
If your comprehensive car insurance policy lapses, you lose your accumulated benefits, such as no claim bonus (NCB), and no coverage for damage and accidents.
But do not worry! This blog will guide you on the steps to take after a car insurance lapse. Keep reading to understand how to minimise insurance losses and get back on track quickly.
What Happens When Your Car Insurance Policy Lapses?
If your car insurance policy lapses, you have two options to choose from:
If the policy lapse period is within the grace period, you can easily renew the existing policy.
In case the lapse is significant or the grace period has passed, you need to purchase a new insurance policy.
Moreover, here are a few consequences of letting your car insurance policy lapse:
High Cost of Insurance Premium | If you try to get a new insurance for your car, in that case, it might attract a higher premium for your comprehensive insurance policy after expiry. |
Loss of No Claim Bonus (NCB) | If your policy lapses beyond the grace period, you will lose your No Claim Bonus, which will result in a higher premium during renewal or new purchase. |
Difficulty in Getting Car Insurance | A lapse in insurance indicates a lack of policyholders’ responsibility. This can result in stricter vehicle inspection for lapsed comprehensive insurance. |
Penalties and Fines | If you drive your car on the Indian roads without a valid car insurance policy, you can be fined as per:
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Grace Period in Car Insurance After Expiry
The grace period in car insurance is the total time that an insurer gives the policyholder to renew before revoking all benefits. The grace period is generally between 15 and 30 days; however, it may vary among different insurance providers.
During this period, if the policyholder renews their insurance policy, they will be able to enjoy the NCB benefits. This means you can still get approximately a 50% discount on insurance premiums while renewing after your insurance expires.
Nonetheless, if your car insurance grace period ends, the policy lapses, leading to no coverage, NCB loss, legal risks, inspections, and possibly higher premiums for a new policy.
What Should You Do If Your Car Insurance Lapses?
If your comprehensive car insurance lapses, you can take the following steps
Contact Your Insurer: Do not panic in case your car insurance lapses. Contact your insurer to inform them about your situation and ask what you can do next.
Ask for the Option of Policy Renewal: Remember to ask if they will provide you with the option to renew your existing plan.
Buy a New Policy: If renewal is denied, you need to purchase a new insurance policy as per your coverage and budget needs.
Tips to Buy a New Car Insurance Policy
In case your lapsed car insurance renewal is denied, follow the tips to buy a new policy as per your needs:
Compare your options wisely, as any insurer you approach will consider you a high-risk customer and offer higher premium plans.
During your vehicle inspection, make sure your car is in its best form.
Keep necessary documents handy, such as the registration certificate, PUC certificate, identity proof, address proof, and driving licence.
How Lapsed Insurance Affects Used Car Resale Value
If you let your comprehensive insurance lapse, it can negatively impact the car's value during resale, like:
1.Signifies Poor Maintenance of Vehicle -Your lapsed car insurance policy indicates that the owner may not be taking care of the vehicle. This might make potential buyers lose interest in buying it.
2.No Coverage History-Regularly renewing insurance indicates good maintenance and low accident claims. Gaps in insurance create doubts for buyers.
3.Inspection Complications-Customers usually want insured vehicles. A lapsed policy can lead to a new inspection, which can complicate the resale process.
4.Lower Buyer Confidence-Lack of current insurance lowers buyer confidence, particularly where no recent claim or repair record exists.
5.Reduced Negotiating Power-Without active insurance, sellers would have to settle for lower prices because of perceived greater risks.
Bottom Line
Letting your car insurance lapse exposes you to significant financial and legal risks. Additionally, insurers may treat you as a high-risk customer, resulting in higher premiums or denial of coverage in the future.
To avoid these consequences, you should always renew your policy on time or opt for automatic renewals. Staying insured not only keeps you compliant with the law but also ensures your financial protection on the road.
Frequently Asked Questions
Below are some frequently asked questions on car insurance policy lapse:
Q1. How can I get car insurance after a lapse?
If you are in your grace period, then you can renew your car insurance by paying your missed payment. On the other hand, if there is no grace period, you will need to buy a new car insurance policy.
Q2. What happens if my car insurance policy only lapsed for one day?
Generally, you are on a grace period if your car insurance lapsed for just one day. You can easily regain coverage by paying your dues or renewing your insurance policy.
Q3. Do I have to pay a penalty to renew my car insurance after it lapses?
No, generally you do not have to pay any penalty to renew your lapsed car insurance. However, if you are found driving without insurance coverage, you can face fines from the authorities between ₹2000 - ₹4000.
Q4. What is the grace period after a car insurance lapse?
The grace period is the time that an insurer offers to a policyholder after the expiry of their insurance plan. They do this so the policyholder can have a chance to renew their insurance before all their benefits are revoked. The grace period for car insurance is usually 15-30 days, but varies among insurance providers.
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