In most of the cases, a car insurance is an annual policy contract that needs to be renewed every year. At the time of purchasing or renewing a car insurance policy, you would notice that the policy document clearly states the time and date from which the cover is effective and the date and time when it will expire. In other words, the policy inception and expiry dates are clearly stated in the policy.
So, when your insurance policy completes a year, you need to renew it before its expiration. However, if you miss the due date, your insurance policy will have a break.
Last week, Mr. Raj Verma made an unpleasant discovery: from the last one week, he was driving his uninsured car on the streets. He called his insurance company only to be told that his policy has already expired.
While some people genuinely forget to renew their policy, others intentionally do it to save some bucks. However, you might save money on car insurance premiums now; it can prove to be costly in the future. If, God forbid, a third person dies in an accident in which your vehicle is involved, the onus of paying compensation would be on you.
Important Aspects of a Car Insurance Policy
There are two important components of a car insurance policy—third-party liability cover and own damage (OD) cover.
- In case of break in third-party policy cover
It is a mandatory cover which covers damages caused to life or property of a third-party due to your vehicle’s fault. A break in the renewal of the policy doesn’t affect this cover as the insurer will renew your policy without much difficulty. Remember, the insurer will not cover claims during the time your vehicle is without any motor insurance cover.
- In case of own damage (OD) cover
In the case of OD cover, the repercussions could be serious. In the case of renewal of a lapsed policy, the insurance company will first inspect and click a photo of your vehicle. It is done to document any pre-existing damages to the vehicle which the insurer will not cover.
Drawbacks of lapsed insurance policy
Hike in premium rates
One main reason for not letting your car insurance policy lapse is the exorbitant premium rates. As stated above, the timely renewal of policy helps you earn NCB. A no claim bonus or NCB is the discount that the insurer rewards you when you do not make a claim during the policy year. It is applicable for the OD cover and can go up to 50% of the premium. However, if you allow your motor insurance policy to lapse, the insurer has all rights to revoke your no claim bonus or give you a lower bonus. Therefore, any refusal of NCB means you will have to pay a high insurance premium.
Reinstating a lapsed car insurance policy takes both your time and efforts as it would mean following the same procedure which you did at the time of purchasing a new policy. Having said that, if you are renewing your lapsed third-party motor insurance, the process is simple. However, if it is a lapsed comprehensive policy, the process can be slightly longer. You may need to fill an insurance form akin to buying a new policy. Also, the insurer will inspect your vehicle to document any pre-damages. The insurer can refuse to renew your policy if your vehicle has too many dents or damages.
Steps to follow to renew your expired motor insurance:
- Inform your insurance company: Though it is feasible to renew a lapsed insurance policy, there are certain exceptions to it. Renewing an expired policy is not same as renewing a normal policy. Hence, it is necessary to talk to the insurer to get more clarity.
- Act immediately: If only a few days have passed since your policy renewal date is passed, the insurer may give you some leeway and renew your insurance policy without many troubles. On the other hand, if several weeks or months have been passed since the deadline, the insurer can ask for a series of documents. Your case will be treated as a fresh policy.
- Do mobile self-inspection: Once you pay for a break-in insurance policy, the insurer will inspect your vehicle. Either you can ask the insurer to inspect the vehicle, or do it yourself. There are various insurers, which allow you to self-inspect your vehicle with the help of a mobile app. Make the video of your car as per the guidelines and upload it on the app. The insurer will inspect the video and issue or reject your policy application accordingly.
The Final Verdict
Given the multiple losses and complications that an insured can face due to non-renewal of the policy, it is necessary to renew your motor insurance policy on time. Nowadays, most of the insurers inform their policyholders about their policy renewal dates through e-mail and SMS alerts. In today’s fast paced internet driven world, online/mobile renewal of the break-in policy is at your fingertips. Further, when you do an online policy renewal, you can get a digitally signed policy immediately.
Do yourself a favour and never let your car insurance policy lapse.