By Paras Pasricha
Every year, like clockwork, car owners face the same familiar reminder of renewing their car insurance. Between busy schedules and endless to-do lists, it’s easy to push it to the last minute or even let it slip through the cracks. But skipping renewal isn’t just a minor inconvenience, it could leave you exposed to hefty repair bills, or worse, legal troubles.
Now, imagine you don’t have to think about it every year. You don’t even have to compare rates, fill out forms, and go through the annual trouble. Turns out, there is such an option. That’s exactly what long-term car insurance plans with the three+three own damage (OD) and third-party (TP) policies aim to do. These plans offer multi-year coverage, eliminating the annual hassle while ensuring continuous protection and even make your motor insurance more affordable. Could this be the smarter way forward for car owners? Let’s explore.
How does three+three year OD+TP plan work?
It’s a new plan, and offers the combination of both OD and TP cover for a full three years. Basically, it changes the earlier structure, wherein TP insurance remained valid for three years, but OD coverage had to be renewed annually, by bundling three years of OD cover with the already mandatory three-year TP cover for new cars.
This means, no need for annual renewals, simple insurance management, and most importantly, continuous protection. The best part is that this new plan comes with several benefits – the best of all is the savings.
Save on premium
First and foremost, instead of paying higher cumulative premiums across three separate annual OD renewals, policyholders can lock in a discounted rate from the start. But the interesting part to note is that over and above the savings one can make by avoiding premium hikes every year, the policyholders also benefit with up to 10% discount on premiums.
For instance, if an annual OD renewal increases by 5-10% every year, a three-year plan keeps costs steady while also providing up to 10% discount upfront.
The result?
More savings in the long run. This makes it a win-win for those looking to save on motor insurance while securing their vehicles for the long term.
Not only this, if you happen to make a claim, then also the premium remains locked for all the 3 years, whereas in a 1-year OD policy, the subsequent premiums can increase after a claim is made. The reason? The no-claim bonus becomes zero.
Long-term coverage and stability
It goes without saying that annual renewals come with uncertainties. Apart from premium hikes, there can be other uncertainties as well like changing terms, new risk assessments, discontinuation of the chosen plan and so on. A 3+3 plan protects policyholders from these uncertainties and keeps their coverage stable for a significant period.
These plans are also beneficial for those who own electric and hybrid vehicles. Such cars come with unique insurance needs because of their costly components – especially batteries, which make up 40-60% of an EV’s cost. Repairing or replacing a damaged battery can be extremely costly, making comprehensive coverage even more essential. With the 3+3 plan, EV and hybrid owners gain additional financial security. The extended OD coverage ensures that critical battery-related risks are covered for all 3 years in case of accidents.
As a final thought, it is worth pointing out that car owners can further maximise protection of their cars in this ‘3+3 OD+TP’ plan by opting for crucial add-ons which complement the long-term nature of this plan. It would be wise to go for ‘zero depreciation cover’ which would ensure full claim payout without depreciation deductions. One must also consider popular add-ons like engine protection cover, tyre cover, return to invoice for ICE vehicles, and ‘battery protection cover’ especially for hybrids and EVs.
So, if you’re still buying your motor insurance annually, it might be time to reconsider.
Paras Pasricha is head, Motor Insurance, Policybazaar.com.
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