You would rarely come across someone who knows something about owning a car but is not aware of car insurance. It is one of the four most important documents that you must carry when driving a car. The other three documents include—your driver’s license, car registration certificate, and valid pollution under control certificate.
Car insurance importance
According to the Motor Vehicle Act of 1988, it is illegal to drive a car without valid insurance. It mandates all vehicle owners to have at least third-party insurance. However, third-party insurance alone is not enough to give you thorough coverage. Instead, a comprehensive car insurance plan protects you, your car as well as the third party better in case of a mishap.
Car insurance coverage
Good car insurance must cover your third-party liability as well as your own damage risks. Standalone third-party insurance protects you only from the legal liabilities arising from the damages caused to the third party. It includes injuries and fatalities as well.
Meanwhile, comprehensive car insurance covers third-party liabilities and own damage. It means the insurer will pay you for the damages caused to your vehicle. Now, the damages can be due to accidents, natural and manmade events, or some other reason.
Car insurance safeguards your interests and saves you from paying for third-party liabilities and own losses. Therefore, you must buy car insurance when buying the car itself. Then, you just need to keep renewing the policy to enjoy the benefits.If you want to avoid the repetitive task of renewing it every year, then opt for a long-term car policy. This option comes with added benefits.
Why is long-term car insurance beneficial?
Here are some reasons why a long-term car insurance policy could be a better choice:
Compliance: A long-term car insurance policy is mandatory in selected cases. In July 2018, the Supreme Court made it mandatory for all cars and two-wheelers to have long-term insurance. This order appliesto vehicles bought after 1st September 2019. As per the order, all cars and two-wheelers must have a three-year and five-year insurance tenure, respectively. This way, a long-term car insurance policy is a matter of compliance.
Fewer renewals:A long-term car insurance policy means fewer renewals. Rather than following the renewal process every year, you can renew your policy once and relax for several years.
Less chance of policy lapse: Despite several reminders, there is always a possibility that you might overlook your policy renewal due date. By renewing your policy for multiple years, you do not have to worry about lapsed policy anytime soon. Remember, driving a car without a valid insurance policy is a punishable offence. It can attract a penalty of Rs 2,000 and a prison sentence of three months, or both.
Save money: By opting for a long-term comprehensive car insurance policy, you save money in two ways. Firstly, a multi-year car insurance policy renewal needs a larger premium amount. However, most insurance companies offer discounts on bulk premium payments. So, you end up paying less than what you would have paid had you renewed your comprehensive car insurance policy annually.
Secondly, the IRDAI increases the third-party car insurance premium annually. This is done after considering the number of claims recorded in the previous year. Usually, it is a 10-20% hike on the previous year’s premium. A long-term premium protects you from such price hikes.
Retain the No Claim Bonus:For every year that you do not raise a motor insurance claim, you earn a No Claim Bonus in car insurance. Many policyholders are found to be concerned about their NCB will be calculated in a long-term policy. In a long-term car insurance policy, the NCB is considered for all the years during which the policy was active. Now, you may not make a claim during one or more years of the policy period. In such a situation, the NCB of the same is considered when calculating the next premium.
Therefore, there is no reason why you should not opt for a long-term car insurance policy. Choose the policy in the same manner as you would do while selecting an annual comprehensive car insurance policy. Use your discretion and compare the features of multiple policies before choosing the right one for your car.