Team AckoJul 22, 2021
Car insurance policy is not valid for a lifetime. It comes with an expiry date. Most of the policies are valid for a year. The Insurance Regulatory and Development Body of India keeps introducing new rules concerning policies, which might have a shorter or a longer policy period than a year. But even they have a defined expiry date. An expired policy means the end of the contract. Thus, to keep the insurance policy valid, you need to renew the policy. Want to know why it is important to renew car insurance on time? Read on.
Here are some points that are crucial to note while renewing car insurance. They will highlight why it is vital to renew car insurance before the expiry date.
The compulsory aspect of a car insurance policy is emphasised on several occasions. First-time car buyers are told that buying a car insurance policy is a good thing from a legal standpoint. But along with buying, renewing car insurance is also essential. Simply buying the policy once is not going to suffice. It is a limited-period plan that needs renewal for undisrupted coverage. Keep renewing the policy and keep ensuring insurance coverage.
Driving around with an expired four-wheeler insurance plan is not better than driving around with no four-wheeler plan when it comes to the legal implications. When a police officer stops you, he is not going to check if you ‘had’ a policy, he is going to check if you ‘have’ one. The policy must be valid to avoid legal issues.
It is better to renew the plan a few weeks before its expiry date. Unfortunately, if your car insurance expires and you only come to know of it when a police official catches you, then you need to pay the fine. At least then, you should renew the policy at the earliest. This is because a repeat offence in this regard will lead to a higher penalty and more cash outflow from your bank account.
Not renewing the Third-party Liability component of your car insurance plan can be troublesome if the car is involved in an accident and causes harm to third parties. In such a case, the insurer will not be liable to pay for the damages, as the policy hasn’t been renewed. This means you will have to manage the third-party liability on your own.
Not renewing the Own Damage component of the four-wheeler insurance policy, which is a part of the Comprehensive Plan, can lead to a financial outflow if the car needs repairs. As the car’s cover has expired, you will have to settle the garage bill on your own without the intervention of the insurance company.
Also, Read: 10 Smart Tips to Renew Your Car Insurance
Car insurers do offer a grace period after policy expiry to take immediate action and renew the plan. However, such a period does not extend the coverage. It simply states that there’s a window in which you can renew the policy without a spike in the premium. If your car is damaged during the grace period and you raise a claim for it, the insurer will reject it on the grounds of an invalid policy as the policy period has expired.
A car insurer might feel the need to inspect the vehicle before renewing its insurance policy if it has not been renewed for a few weeks. This is to ascertain the current condition of the vehicle and to note any pre-existing damages. Such an inspection might take a few days to be fixed, which means your car will be uninsured for a few more days. Also, the payable premium might be increased after car inspection.
NCB reset is terrible news. It means the stacked up No Claim Bonus, which is a result of not raising a claim during the policy period can be reduced to zero. This renewal discount can be as high as 50% if claims haven’t been raised for a continuous five-year period. If you do not renew the Comprehensive Plan before 90 days after the policy’s expiration date, then such non-renewal can lead to an NCB reset.
Here’s a table that will help you understand NCB in a better manner.
|No. of Claim-free years||Renewal Discount (NCB)|
|Post 1 year||20%|
|Post 2 years||25%|
|Post 3 years||35%|
|Post 4 years||45%|
|Post 5 years||50%|
One of the important questions asked during car insurance renewal is if the policy has expired or not. If the policy has expired, the premium for it will be higher in general as compared to a non-expired policy.
Whether it is paying a penalty for driving without insurance, managing third-party liabilities, or simply towing the damaged car to a nearby garage and paying the repair bill, all these activities are hassles. They are time-consuming tasks, need a physical and mental effort, and cost money. Non-renewal of a car insurance policy will expose you to such hassles.
Irrespective of you buying insurance from an agent, car dealer or an aggregator, you can renew car insurance online from a digital-first insurer such as ACKO easily. Here are the advantages of doing so.
Renewing car insurance from a digital-first insurance company can help you save money. This is because the premium charged by such companies is comparatively on the lower side. The reasons for this are that they do not rely on middlemen to sell their policies, have a tech-enabled process, and do not have massive operating expenditure due to their reliance on online infrastructure instead of an offline one in the form of sales/branch offices.
Car insurance renewal is no longer time-consuming. It is a task that can be ticked from your checklist within minutes thanks to online car insurers. Such insurers have their website/app from which you can renew your plan easily. In terms of the time required to buy/renew an insurance plan, it is like the time taken to book a movie or a flight ticket.
With online insurance renewal, there is no need for extensive form-filling. Neither is there a requirement of submitting documentation. Simply visit the insurer’s website or use their app to select your car, choose a plan, pay the premium, and insure your car. All this from the comfort of your home without seeking an appointment or need for expert advice. If required, assistance is available via call.
Now that you are aware of the importance of on-time car insurance renewal and the benefits of doing so via the online method, do not let the policy expire. Renewing the plan weeks before the expiry date is also an option. You can take your time to go through the coverage, compare other plans in the market, check out other insurers and then make an informed car insurance renewal decision.
If you still have some question marks hanging over your head after going through the above article, the following Q and A section might help in erasing the hovering symbol. If your query is not addressed, do not hesitate to contact the customer care team.
Do I have to pay more premium to renew a Comprehensive Car Insurance Policy than what I paid for buying it?
In most cases, the payable premium will be less because the overall value of the vehicle will go down in a year. Also, if you have not raised any claims, you shall receive a renewal discount, which will further reduce the premium.
What happens if I miss renewing my car insurance and do it two days after the expired plan?
For those two days, you will be uninsured. You will be covered once again after the beginning of the new policy period. Since the gap was just for two days, there shouldn’t be a major impact on the payable premium.
When should I renew my car insurance policy so that I do not miss out on insurance coverage?
You should renew the plan before its expiry date. Usually, insurance companies send out reminders in the form of SMS, email, or call. Renew the plan as soon as you receive such a notification.
Is it okay to drive an uninsured car considering I am going to renew the plan on the weekend?
You should avoid driving an uninsured car because it can lead to legal issues, penalties, and monetary loss in case of damage to the car, as the insurance company will not cover the mishaps. You can renew the policy online in just two minutes and then continue to drive without worries.
Can I pay the premium in monthly instalments instead of paying for the entire year in one go?
In most cases, such a facility is not available. Car insurance policies in India are usually available for a year and you are required to pay the entire premium in one go and not in instalments.
I am not comfortable with paying the renewal premium via Internet Banking. Can I still renew the plan online?
Yes, you can renew the plan online without Internet Banking. You can use your Debit Card for making the payment.
The mobile number that I had used to register while buying the car insurance policy has changed. How will I get policy renewal reminders?
Usually, policy reminders are sent on email along with SMS and call. If your mobile number has changed, you can inform the insurer about the same and share your new number with them. This way, they will share renewal notifications on the new number.
Is NCB applicable on a Third-party Plan?
No, NCB is applicable only in the case of a Comprehensive Cover.
Will the NCB increase to 60% if I do not raise a claim for a sixth consecutive year?
No, the NCB will not increase to 60% if you do not raise a claim for a sixth consecutive year, as it reaches its peak at 50% after five consecutive years. For the sixth consecutive year also, you shall receive the 50% renewal discount.
Does online car insurance renewal means no talking to an agent?
Yes, online car insurance renewal means you can renew your plan directly with the insurer without the need to speak with an agent. This is a more transparent method of buying and renewing the car insurance policy as you are in control of the decisions you make. If you need assistance with the renewal process or concerning the inclusions of a plan, you can contact the customer care team and speak to them.
Can I renew the plan from a different insurer even though my current plan has not expired?
Yes, you can renew a plan from a different insurer before the expiry of the current plan. You should renew it before expiry to avoid lapse-related consequences such as inspection and premium hike.
Does online insurance mean less coverage since the cost is low?
Online insurance does not necessarily mean low coverage. The cost is low due to non-dependence on agents and focuses on tech-based infrastructure. However, you must check the coverage before buying the policy. It is a good idea to keep the coverage constant and then check for an insurance company that can offer that coverage at a better price.
Which is the biggest renewal discount in car insurance?
The biggest renewal discount is the No Claim Bonus.
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