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The lockdown and the rise in confirmed cases of coronavirus have not only confined the whole nation within their homes but also resulted in some serious lifestyle changes. And the first thing it has impacted is our travel habits, which are not going to be back to normal any time soon. The government will certainly continue to put restrictions on travel, and we will inevitably end up not using our vehicles for a long time. Naturally, many people are letting their motor insurance policy lapse or waiting for restrictions to get lifted before renewing it.
But, this is not a wise step as it leaves you vulnerable to financial damages. The following are the reasons why it is important to renew your motor insurance policy within the due date.
Your Motor Insurance Premium Could Go North
Car insurance companies consider policy lapse cases as a higher risk. Renewing the car insurance policy after lapse will result in the policyholder paying 7-12% more for the same coverage amount and benefits. So, while you might save a quick buck on the premium amount now, in the long run, it will cost you much higher.
Losing out on Key Benefits
Motor insurance policies, especially bike and car insurance, is designed in such a way that, if you do not renew it within due date, you will lose the continuity benefits. For every claim-free year, you are entitled to a no-claim bonus (NCB), and by not claiming consecutively for 5 years, you can reduce your premium amount by almost 50%.
In case you do not renew your motor insurance policy, not only you lose the continuity benefit, but also you have to start afresh. If the policy is renewed after the due date, you need to pay a much higher premium compared to the previous premium amount.
Inspection and Late Fees
It is advised not to let your car or bike insurance policy lapse, especially after the 30 day grace period of insurance renewal. Otherwise, your insurance company is going to charge you a late fee.
Plus, in a comprehensive policy (third party + own damage), in case of lapse, the insurance company needs to get your vehicle physically verified by an inspection agent or surveyor. The inspection cost leads to increased expenses, rather than saving on the premium amount.
Loss of Comprehensive Policy
With the lapse of your car or bike insurance policy, you lose the coverage against damages caused due to natural and man-made disasters like earthquakes, floods, cyclones, theft, vandalism, burglary, or riots.
You don't want to put your vehicle in jeopardy because of such incidents and make things worse. Therefore, renewing your motor insurance policy is a must. So, it's better to be covered.
Uncalled Risk or Liability
It's not like you won't use your vehicle at all during the lockdown or restriction phase. There can be some requirements or any emergency when you need to use your car or bike for the commute. In these situations, you don't want to use an uninsured vehicle.
Driving a vehicle without motor insurance is not only illegal but also increases the risks involved. For example, if you got involved in an untoward incident, and there are third-party property damage and bodily injuries, you will have to bear the expenses in full. This can have severe implications on your finance.
Although the premium amount might pinch your pocket, securing a car or bike insurance will protect you from such risks and legal liabilities. Protection from Legal liabilities
Under the Motor Vehicles Act, 1988, third-party insurance is mandatory for all vehicle owners in India. It protects you from all legal liabilities by other parties, including third-party bodily injury and property damage. Third-party liability insurance is the basic cover and has the lowest premium in the segment. Thus, getting it will help you to continue with the policy.
Gives You a Sense of Security
Having valid bike or car insurance gives you a sense of security and safety while riding your vehicle. You do not have to worry about traffic cops and penalties or look for alternative routes to avoid getting caught and fined. You should know, as per the newly amended Motor Vehicle Act, 1988, the penalty for driving without a valid insurance is Rs 2,000. The penalty amount is equivalent to the annual premium amount of any newly purchased commuter bike.
Instead of cancelling the car insurance, ask your insurer for discounts on premium amount. If you have consecutive claim-free policy years, then your insurer will not hesitate to offer you a discount.
Also, consider removing additional coverage if you do not require them like roadside assistance, coverage on after-market accessories and consumable cover to lower the premium amount. Buying insurance coverage on the factory fitted version of the car will help you get an attractive insurance deal. Further, buying or renewing your bike insurance online from the insurer's or broker’s website will help you get a cheaper rate on the insurance premium. When you buy online, the insurance company passes the benefit of a lower cost to the customer. This enables you to save a lot on the premium amount compared to buying offline.
It is indeed a difficult time, and many are staring at substantial financial damage due to loss of work or business. In such a time, cutting unnecessary expenses is a top priority, and car insurance cost is also included in this.
But cancelling or not renewing your motor insurance policy does not yield any positive result as the risk of larger monetary outflow remains. Moreover, if you cancel your policy, in the long term, the cost will be much higher when re-activating your policy plan.
In such hard times, you should consider ways to lower your motor insurance premium amount, which can be done with little awareness and effort. You do not want yourself exposed to risks and complicate matters.