Paras Pasricha
Most car owners spend weeks comparing mileage, features and discounts before buying a vehicle. But when it comes to insurance, the decision is often reduced to one question: “How much is this year’s premium?”
Today, with rising repair costs, sophisticated vehicle technology and increasing ownership expenses, it is worth looking beyond the annual renewal cycle. In many cases, a multi-year motor insurance policy can offer not just greater convenience but also better financial value over the long run.
For new car buyers, insurers now offer a 3+3-year Own Damage (OD) plus Third-Party (TP) insurance plan that combines both covers for three years under a single policy. Earlier, while third-party insurance for new cars remained valid for three years, the own damage component had to be renewed every year.
This new structure eliminates the need for annual renewals, reducing the chances of missed deadlines and accidental lapses in coverage. More importantly, it ensures uninterrupted protection during the initial years of ownership, when the vehicle typically commands its highest value.
Many consumers focus only on the premium they pay today, without considering what they may end up spending over the next three years.
Every annual renewal is exposed to changes in insurer pricing, inflation in spare parts, labour costs and rising claim expenses. As vehicles become more sophisticated, even minor repairs involving sensors, cameras or electronic components can lead to significantly higher repair bills than in the past.
A multi-year policy protects customers from these annual revisions by locking in the own damage premium for the entire three-year period. This provides greater certainty over future insurance costs while eliminating the need to compare and purchase a policy every year.
The financial benefit of a multi-year policy goes beyond convenience. Apart from protecting customers from annual premium hikes, insurers currently offer significant discounts on long-term own damage premiums. When these upfront discounts are combined with the premium increases avoided over three years, the overall savings become meaningful.
Take the example of a newly purchased Maruti Grand Vitara. A one-year comprehensive policy with popular add-ons such as zero depreciation, roadside assistance, engine protection and consumables cover costs around Rs 19,700. A comparable 3+3-year OD+TP plan is available for around Rs 38,700, based on an Insured Declared Value (IDV) of approximately Rs 13.68 lakh.
Over three years, the long-term plan can work out to be more economical than purchasing similar coverage through annual renewals.
Another advantage of locking in the policy for three years becomes evident when a claim is made. Under a one-year own damage policy, making a claim usually results in the loss of the No Claim Bonus (NCB), which can make the next renewal more expensive.
With a three-year own damage policy, however, the premium remains fixed throughout the policy period. Even if a claim is made, customers do not face an immediate increase in premium because there is no annual repricing during those three years.
Policyholders who complete claim-free years continue to build their No Claim Bonus over time, with cumulative benefits eventually reaching 45 or 50% depending upon the insurer bought.
Cars are changing. Insurance should too. Today’s vehicles are equipped with advanced driver assistance systems, connected technologies, sensors, cameras and expensive electronic components. As a result, repair costs are steadily increasing, making comprehensive insurance more valuable than ever.
Consumers opting for a multi-year policy should also consider strengthening their protection with relevant add-ons. A zero depreciation cover ensures that depreciation is not deducted while settling claims for replaced parts. Engine protection can prove valuable in flood-prone areas, while roadside assistance offers help during unexpected breakdowns. Depending on the vehicle, tyre protection, Return to Invoice, engine protector, and battery protection for electric and hybrid vehicles can further enhance financial protection.
Buying motor insurance should not be about finding the lowest premium for the next twelve months. It should be about securing reliable protection at the best value over the years you own the vehicle.
A multi-year motor insurance policy does exactly that. It reduces the hassle of annual renewals, protects against rising premiums, ensures continuous coverage and often delivers meaningful savings over the policy term. As vehicle ownership becomes more expensive and cars become increasingly technology-driven, taking a longer-term approach to insurance is not just more convenient—it is also a smarter financial decision.
The author is business head, Motor Insurance, Policybazaar
Disclaimer: The information provided in this article is for general awareness and should not be considered financial or insurance advice. Insurance benefits, premiums, discounts, and policy terms vary across insurers and individual circumstances. Please read the policy document carefully and consult your insurer or a qualified insurance advisor before buying or renewing a motor insurance policy