Motor insurance covers the risk of your vehicle getting damaged due to cyclone, earthquake, natural calamities, building collapse, stone falling, fire, theft etc, while your vehicle stationed.
The impact of the COVID-19 outbreak has devastated the global economy and with many countries in extended lockdown, there has been a seismic shift in customer behavior and business operations. For vehicle owners, an impact has been reduced usage, which means that a majority of owners might be wondering if renewing the motor policy is something they can afford to procrastinate about.
Firstly, is an insurance necessary if my vehicle is not going out on the roads? The short answer is – Yes! This is because we all know that misfortune can strike at any time; and not just when one is driving the vehicle. Covering your asset once in year is a smarter option, the next step is to make it secure through timely renewal of insurance. Always remember – motor Insurance doesn’t just cover accidents on roads! Let’s –quickly look at some reasons why timely renewals are a smart move.
Non Accidental risks: Motor insurance covers the risk of your vehicle getting damaged due to cyclone, earthquake, natural calamities, building collapse, stone falling, fire, theft etc, while your vehicle stationed. Have you considered who will bear the cost when someone crashes into your parked car? What about damages caused due to excessive heat during summer? What about theft of vehicles? All these factors increase the exposure to your vehicle w.r.t., damage and, if not insured, can be the cause of severe financial strain.
Loss of No Claim Bonus years – NCBs are hard-earned discounts that represent how better driver you are. For every unclaimed year, you get a discount in the form of no claim bonus, ranging from 20%-50% depending upon the number of unclaimed years; which you may lose if you don’t renew within 90 days of expiry. NCB is offered even in case of switching from one insurance provider to another as the core motor insurance product is standard across insurers.
Re-Inspection of Vehicle – Another advantage to timely renewals is to mitigate re-inspection of your vehicle which may again create a problem leaving unknown damages not covered. If your policy is renewed before expiry of existing policy, you do not need to have to go through inspection procedure. If there has been a gap between the dates when your policy expired and when the policy is planned to be renewed, which is termed as lapsation of the policy will require an inspection. In fact, during a break-in insurance, your vehicle will get re-inspected and there is possibility that you may lose on some selective add-ons depending upon the . If an obvious defect is noticed, the vehicle will be re-inspected and the premium may increase depending on the intensity of the damage. Only suspension and frame damage are the most common damages that go unseen in initial inspections.
Renewal can become costlier – A legitimate concern is that not renewing policy on time can make you pay more as every year third party premium is changed as per IRDAI and you may get a loaded premium. The damages which may have caused during the missed period will get examined before offering you any add-ons.
Miss out on benefits of Zero Depreciation- Some companies’ do not offer zero depreciation in the case of Non NCB (No Claim Bonus) or non-renewal period. This implies that your car will be devoid of its general depreciation during car insurance claims. Depreciation is the decrease in cost of your car due to its natural wear and tear. The older your car is, the higher is its depreciation.
Attracting penalty – Driving without a valid insurance can be a huge problem and you can end up in paying penalty of Rs 2000 for first offence, Rs. 4000 for subsequent offence as per Motor Act 2019. Liability only policy (Third party insurance) is mandatory for all vehicles, at least liability only policy should be renewed as there to use vehicle in public place as per Motor vehicle Act 1988.
If these reasons were not enough, most insurers are offering added benefits to vehicle owners to help them adapt to the new normal. Examples include – online renewal facilities, roadside help like services, seamless claim assessment and settlement, self inspection app/link, etc. Thus, as we can see, a single motor renewal on time can give you many benefits, so don’t let lockdown come in between you and your motor insurance.
By Parag Ved, President and Head – Consumer Lines, Tata AIG General Insurance