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Car Insurance Grace Period: Meaning and Importance

Team AckoJul 26, 2021

Motor insurance is a contract between the policyholder and the insurer (ACKO) that needs to be renewed on or before the expiry date. An insurance policy lapses when you fail to renew your policy before the due date. An expired insurance policy could put you at financial risk should you be involved in an accident or mishap. 

To encourage you to keep your car insured, you may be entitled to a grace period to renew the plan. Read ahead to understand the meaning and importance of the car insurance grace period and how it can affect claims.

Car insurance grace period: Meaning and importance

Meaning of grace period in car insurance

The grace period in car insurance is the amount of time the ACKO allows you to renew the insurance policy before you lose the policy’s benefits. During this period, you continue to enjoy benefits such as the No Claim Bonus (NCB) you might have earned for not raising claims. However, your car remains uninsured during the grace period; hence, you are not eligible for claims against your policy

While you may have extra time to renew the plan, it is vital to keep your car insured at all times. Unforeseen mishaps such as floods, cyclones, riots, vandalism, or in case car theft can wreak havoc on your finances. 

Keeping your car insured at all times will protect you from financial losses during unforeseen events. Additionally, renewing your policy within the due date will avoid inspection of the vehicle, which might be required if there is a considerable gap between the policy expiry and renewal date.

At ACKO, you can renew the plan without any hassles. We keep you updated about the status of the policy and remind you when it is time to renew it. You can quickly renew the plan through our website or mobile app.

What is the duration of the grace period in car insurance?

The grace period for car insurance renewal is typically from 15 to 30 days, depending on the terms and conditions mentioned in the policy. While you can renew the car insurance after the grace period, you may have to pay the penalty or late fee apart from losing benefits such as NCB.

Consequences of not renewing the insurance policy

As per The Motor Vehicles Act, 1988, driving a car on Indian roads without Third-party Insurance Policy is illegal. Here is what happens if your insurance policy expires.

  • No cover and claim: No cover means you cannot raise any claims. In case of damages to your car, ACKO is not liable to compensate for the loss.

  • Legal trouble: Driving your uninsured car will invite fines or penalties by the traffic police. A repeat offense will invite harsher penalties or even a jail term.

  • Loss of NCB: The discount you earn for not raising claims during the period will automatically stand canceled if you do not renew it within 90 days from the expiry date.

  • Scope for inspection: Since the policy has expired, your car may have to be inspected before ACKO can consider the policy for renewal.

  • No third-party cover: In case of an accident where a third party is involved, you have to bear all the expenses.

Benefits of renewing car insurance within the grace period

Here are the advantages of renewing car insurance within the grace period.

  • Get to keep the NCB: If you renew the plan within the due date of the grace period, you get to enjoy the NCB you have earned.

  • Reduce any potential premium increase: By renewing the plan within the expiry date of the grace period, you get the benefit of avoiding an increase in the premium.

  • The policy remains active: During the grace period, the policy continues to be active; however, you are not covered against damages to the car or third-party liabilities. While you cannot raise claims, you continue to enjoy the benefits of NCB for 90 days from the date of expiry.

How to renew an expired car insurance

If inspection is not required to renew car insurance, you can renew the plan without hassles. This is possible because of ACKO’s smooth online process. Here is the process to renew the car insurance from ACKO.

New customers

  • Step 1: Download our mobile app or visit our website.

  • Step 2: Enter details of your vehicle and previous policy (if available).

  • Step 3: Select the plan or continue with the existing plan, pay the premium, and instantly receive the policy document.

Existing ACKO customers

  • Step 1: Access your account via our website or mobile app.

  • Step 2: Choose the policy card of your vehicle and click to renew or change the plan.

  • Step 3: Pay the premium and receive the policy document.

Car inspection process

If ACKO needs to inspect the car before renewing car insurance, here is the car inspection process for renewal.

  • Step 1: You can call us or visit our website to initiate the renewal process.

  • Step 2: ACKO will set up a time with you to inspect the car.

  • Step 3: Provide all details asked by our support team assigned for the inspection. After the inspection, we will create a custom quote to insure your car.

Things to do when your car insurance has expired

Here is a list of action points if you find yourself in a position where your policy has expired.

  • Contact ACKO: Let us know that your current policy has expired and you want to renew it. This can be done through our website or mobile app.

  • Don’t drive: Driving an uninsured vehicle on public roads can lead to legal issues. Park it in a safe place so that it has minimal chance of getting damaged. An expired policy will not cover damages until it is renewed.

  • Renew as soon as possible: Ensure that you renew the plan at the earliest to avoid unforeseen financial troubles.

  • Review your plan: Review the cover for better coverage and include add-ons to protect yourself against specific damages or losses to your car.

Frequently asked questions

Here are some commonly asked questions about the grace period in car insurance.

FAQs

Is there a government law for the grace period in car insurance?

All insurance policies should be renewed by the due date. Driving an uninsured vehicle is a traffic offense and attracts penalties. However, insurers can provide a grace period for the policyholder to renew the plan subject to the terms and conditions of the policy.

Will I lose my No Claim Bonus (NCB) if my car insurance policy expires?

You continue to enjoy the NCB earned during the policy period if you renew the plan within 90 days from the due date.

Can I buy a car insurance plan from ACKO if my previous policy has expired?

Yes, you can renew your expired car insurance policy. You can insure the vehicle by buying it from our website or mobile app.

My previous policy has expired. Can I switch to ACKO to buy car insurance?

Yes. At ACKO, you can buy insurance for your car even if the previous policy has expired. Provide a few details of your vehicle, location, and the year of manufacture so that we can create a custom car quote for your car.

What is the grace period in insurance for a new and a used car?

The grace period offered by insurers is for the renewal of the insurance policy. Therefore, there is no difference in the grace period for a new or a used car.

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