How does an Expired Policy Impact Car Insurance Renewal?

How does an Expired Policy Impact Car Insurance Renewal?

Expired Policy Impact: It is quite common to miss out on car insurance renewal. There can be umpteen numbers of reasons for it, such as an emergency at home, a hectic daily schedule, etc. But many times, people end up skipping on renewing their car insurance to save on the expense of the premium amount without fully understanding the legal repercussions. Let’s take a look at why car insurance is essential in India.

Expired Policy Impact
Expired Policy Impact

Why is Car Insurance Essential?

The Motor Vehicles Act, 1988, makes it mandatory for all motorized vehicles to have at least third party insurance. Other than being compulsory, the Indian roads are notorious for challenging to drive on. This makes motor insurance important in India. The road infrastructure in India, although developing, hasn’t been able to keep pace with the increasing number of vehicles on the road. This results in your car being exposed to a higher risk of accident or damage. While you might take all the necessary precautions, there is always a chance that you might get hurt by the negligence of others. This, in turn, can cause financial loss and personal injuries. Add trauma to it, and you will be left dealing with mental stress. In such cases, having car insurance can help reduce financial and psychological pain.

Benefits of Car Insurance

Everyone is aware that a car is an expensive machine, and so is its upkeep; even a minor accident can lead to considerable expenses. Car Insurance takes care of such costs when they arise, providing financial relief to you. Car insurance also covers you against any legal consequence arising out of an accident caused by your negligence. Coverage will also pay for medical treatment if the accident causes injuries that require hospitalization. You will again be relieved of the financial burden due to the high medical bills.

You can easily renew car insurance online, which gives multiple benefits over the offline renewal of car insurance. The most attractive benefit is the lower premium you will be paying due to the low operating costs and absence of a broker.

What is a Lapse/Break-in Car insurance Policy?

Car insurance is an annual contract and is needed to be renewed annually by its due date. This date is mentioned in the policy document. A break in policy or lapse occurs when there is a failure to renew the plan by the due date.

After the break-in policy, any claim made won’t be entertained by the insurance company, as the plan is no longer valid. And in case of an accident, one has to bear the entire cost from his/her pocket.

Car Insurance Policy
Car Insurance Policy

Lapsed Policy

Definition: The policy for which all benefits to the policyholder cease and is terminated due to nonpayment of the premium amount on the due date or even after the grace period is called a lapsed policy.

Description: Excessive delay in payments and servicing of the policy leads to the policy being dead or lapsed. However, a lapsed policy may be revived by fulfilling the terms and conditions as per the policy statement. To avoid losses to all parties, generally, the revival and reinstatement are encouraged and facilitated.

A consequence of Car Insurance Policy Lapse

A lapse in a car insurance policy can expose you to risks, such as:-

  • You will be financially liable for any repairs when requires
  • Any compensation to a third party is again your responsibility
  • You can invite legal prosecution for violating the Motor Vehicles Act, 1988
  • You lose out on accumulated bonuses and other benefits, like No Claim Bonus(NCB)

Also, getting a lapsed policy reinstated is a time-consuming process. As it would require you to follow the procedure applicable when purchasing a new car insurance policy online or offline. This is true, especially in case of a comprehensive car insurance policy. To renew the policy, you will need to fill up a new proposal form. Also, the insurance company will inspect the vehicle, sending a company representative for the purpose.

The inspection will be done to check and document any pre-existing damage to the car. Any damage found will not be covered by the insurance provider, even if they decide to insure the vehicle in the future. There is also a probability that the insurance company will charge a higher premium for the insurance of a vehicle whose policy has lapsed, and can even reject the insurance proposal.

A lapsed policy invites multiple losses along with complications in renewing it. So, it is prudent to renew the policy on time. Nowadays, insurance companies remind their customers regarding policy renewal through emails and SMS alerts. Be it offline or online; you can easily renew your Motor Insurance. Online renewal offers the benefit of receiving the benefit of a digitally signed policy immediately.

Renewing a Lapsed Policy

There are a few ways that can help you save money when you renew a lapsed comprehensive car insurance policy. Here are a few points that help you save money on your motor insurance policy renewal:-

  • Have a Budget

When you renew your car insurance policy, have a pre-planned budget on the mind. You can opt for third party insurance, which provides coverage against third party property damage and bodily injury or death of a third party. You can also consider a low-priced motor insurance plan, but do check the benefits provided by the policy. If you have a bigger budget, you can always go with the comprehensive plans. Which usually provide cover against theft, etc.

  • Compare Car Insurance Quotes Online

A significant advantage of renewing motor insurance policy online is the ease of comparing different plans. Look for insurance plans that cater to your needs and compare the shortlisted schemes.

  • Check the Features

Before you renew your car insurance, make sure that you read the policy terms and conditions. The policy might have a particular feature that you might not want. Personal accident cover is the best example of it. You can remove your accident cover if you already have private accident insurance. This, in turn, will help lower your premium.

  • Know the Value of your Car

To save yourself from paying a higher car insurance premium, you should be aware of your car’s value. Hence, calculate your car’s market value before renewing the car insurance policy. Knowing the depreciated value of your vehicle will ensure that you can get competitive quotes from the insurance provider and save money on the premium amount.

While these tips will help you save money at the time of policy renewal, it always better that you renew your policy on time. Do not let it lapse.

Two-wheeler – Bike Insurance

A bike insurance plan offers protection against liabilities that arise from injuries to the rider and the pillion as well as third parties, depending on the kind of policy you purchase. It is essential to compare plans between insurers. This facility is available online and can be done right from your home through the website!

Two-wheeler insurance is an insurance policy required to provide protection to your two-wheeler against any damage which might result in a financial loss. In addition to it, any third party liability which has arisen due to the use of your two-wheeler is covered under two-wheeler insurance. As per the Motor Vehicle Act, it is mandatory to buy a Liability only policy without which one cannot use the vehicle on road.

Who is the policyholder in insurance?

Policyholder. An entity that owns an insurance policy and has the right to exercise all privileges under the contract of insurance, except where restricted by the rights of an assignee (see assignment). A policyholder may or may not be the insured, or the sole or one of the beneficiaries of the policy.

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