Car insurance is a legal mandate under the Motor Vehicles Act of 1988 in India. Driving a vehicle without an active insurance policy is not only illegal but also financially risky. However, it has been seen that many car owners tend to overlook the renewal of their insurance policy, allowing it to lapse. Letting your car insurance lapse can have serious consequences that go beyond paying fines.
Here’s why renewing car insurance on time is crucial?
Legal repercussions: The most immediate impact of a lapsed car insurance policy is that you’re driving illegally. In India, every vehicle on the road must have at least third-party insurance coverage. If your insurance has lapsed, you could face legal penalties including fines or even imprisonment for repeat offenses.
Financial liability: If you are involved in an accident while driving with a lapsed insurance policy, you will be responsible for all expenses. This includes repair costs for your vehicle and any damage caused to third-party vehicles or property. Without an active policy, you will have to bear these costs out of pocket, which can be substantial, particularly in the case of accidents involving multiple parties or severe injuries.
No coverage for damages: Comprehensive car insurance policies provide coverage for damage to your vehicle caused by accidents, theft, natural disasters, or even fire. When your policy lapses, all these benefits disappear. Any damage that occurs during the period when your insurance is not active will not be covered, leaving you financially exposed.
Loss of No-Claim Bonus: One of the key benefits of maintaining continuous insurance coverage is the accumulation of a No-Claim Bonus (NCB). The NCB is a discount offered by insurance companies for every claim-free year. It can significantly reduce your premium costs in the long run. If your policy lapses for more than 90 days, you risk losing your NCB, which means higher premiums when you finally renew your policy.
Higher renewal premiums: Insurance companies view lapsed policies as a higher risk, meaning your premium may increase when you renew it. Additionally, you may have to undergo a vehicle inspection before your policy can be renewed, adding to the inconvenience and costs. Delays in policy renewal could also lead to longer processing times.
Legal issues in case of accidents: In case of an accident involving third-party damages, the absence of insurance can lead to legal battles. If someone is injured or property is damaged, the victim may file a lawsuit against you. Without insurance, you will have to cover legal fees and compensation, which can be financially crippling.
Limited options for policy renewal: Once a policy has lapsed, you may not be able to renew it immediately without going through additional formalities. Some insurance providers may require you to purchase a new policy instead of simply renewing the old one. This could result in higher premiums, limited coverage options, and potential waiting periods before the new policy becomes effective.
How to prevent your car insurance from lapsing?
- Set reminders: Mark your calendar or set a reminder on your phone for the renewal date. Insurance companies also send reminders via SMS or email, so keep an eye out for these notifications.
- Auto-renewal options: Some insurers offer auto-renewal services where the premium is automatically debited from your account. This ensures your policy is always active.
- Early renewals: Most insurers allow you to renew your policy up to 30 days before the expiry date. Renewing early not only prevents lapses but also gives you time to compare different policies and select the best one.
- Install insurance apps: Many insurance providers have apps that send regular notifications and allow for seamless policy renewal. Downloading these apps can make the renewal process easier.
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