If you own a vehicle, it is mandatory to have a third-part insurance cover under the Motor Vehicles Act. Driving an uninsured vehicle will entail a fine of `2,000 for the first offence or imprisonment of up to three months. The amount of the fine doubles for every repeat offence. In addition to this legal aspect, there are many other factors that makes it vital for your vehicle to be insured.
In case of an accident, the insurer will not settle any claim in case of a lapsed policy either for own-damage or an injury to a third-party, where the liability can be unlimited. It will not pay any personal accident cover for hospital bills. Damage to the vehicle because of natural calamities like a storm or earthquake will not be covered either. Even transfer of car registration or termination of hypothecation from registration certificate after car loan closure cannot be done in case of a lapsed motor insurance policy.
Renewing a lapsed policy
It is crucial to renew your car insurance policy before the due date. Do not ignore the renewal reminders sent by the insurance companies one month in advance via SMS or mail. Renew the policy online via net banking or debit/credit card or by dropping a cheque at the branch office of the insurer.
Ideally, those who have purchased their vehicles after 2018 should opt for a long-term policy (three years for cars and five years for two-wheelers) which will save the hassle of renewing it every year. Also, go for a comprehensive policy with add-on to reduce the financial burden in case of an accident.
Inspection of the car
In case your motor insurance has lapsed, it will take a longer time to renew the policy as the insurance firm will do an inspection of the car. This process could be time-consuming and you will have to pay the inspection charges. Keep all the documents ready for the inspection including past claims, if any. In case of minor damages/dents, the insurer will reduce the Insured Declared Value after the inspection and set the premium accordingly. The vehicle survey certificate is valid for not more than 24 hours, so make sure you submit all the documents on time.
Rakesh Goyal, director, Probus Insurance, says, “Renewing your motor policy on time helps you to avoid the hassles of paying higher premiums which are otherwise charged if your policy gets lapsed.”
Loss of no claim bonus
A break in the policy would mean that the insured will lose no claim bonus (NCB) accumulated for not having raised any claims during the policy year. This bonus can be availed while you renew your policy on time. The NCB discount is 15-20% for the first claim-free year, and increases up to 50%.