Having a vehicle insurance policy is mandatory from two perspectives: first, it is mandated by the law, and second, it offers financial coverage against any liability arising from an accident. However, to continue enjoying these benefits, policyholders need to opt for car insurance policy renewal before the policy expiry date.
So, how many days before you should renew your car insurance plan? Read on to know.
When to opt for Car Insurance Policy Renewal?
Whether you purchase a car insurance plan online or offline, it comes with a date of expiry. Most insurance policies stay valid for a year. However, some insurance companies also offer long term car insurance, which does not require yearly renewal.
When it comes to annual car insurance plans, you, as a policyholder, must keep the expiry date in mind and renew your policies before 45 days of expiry.
Moreover, during these 45 days, you can conduct proper market research and assess the existing coverage benefits. Doing so will assist you in knowing if something needs to be added or removed from your current policy.
However, if you forget to complete the car insurance renewal within the expiry date, you can still approach the insurance company for a grace period. A few insurers provide a 30-90 days grace period, within which you can renew your car insurance policy without facing any consequences. Meanwhile, some insurers might also charge extra fees for renewing a policy during the grace period.
Why is on-time Car Insurance Policy Renewal Necessary?
Here are a few pointers explaining why renewing a car insurance policy before expiry is crucial:
1. It is a legal compliance
A valid third-party car insurance plan is a legal clause under the Motor Vehicles Act of 1988. So, failing to renew your vehicle insurance policies within the expiry date means you are failing to adhere to the regulatory body’s recommendations. This could attract heavy penalties and fines if you face an accident involving a third party with a lapsed insurance policy.
Thus, renewing a car insurance plan on time is imperative to steer clear of legal issues.
2. Non-renewal can result in financial liabilities
Not renewing the car insurance policy can lead to hefty financial liability for you as a policyholder. For instance, in case of an unfortunate road accident, you will have to pay for your medical expenses and the cost of car repair from your own pocket.
Further, the non-renewal of third-party car insurance policies could be troublesome if a car causes significant harm to a third party due to an accident. In such a situation, you will have to tackle the third party and pay for the related expenses, which could add to the financial burden in your life.
3. Loss of NCB
Not completing a car insurance policy renewal can result in the loss of a No Claim Bonus, which is a reward or bonus that you, as a policyholder, get for not making a claim during a policy year. Insurance companies offer around 20% NCB to policyholders for the first claim-free year. Further, this discount can go up to 50% for the fifth claim-free year.
However, not renewing a policy post expiry date can result in the lapse of NCB.
Evidently, forgetting to renew the car insurance policy on time can bring several difficulties to your life as a car owner. To avoid falling prey to such situations, follow the TechCrunchBlog to get more insight into crucial financial tools.
Whether it’s paying higher premiums, losing NCB or facing financial liabilities, all these activities bring hassle. They are time-consuming and would result in a financial burden. Thus, to steer clear of such hassles, you must complete your car insurance policy renewal on time.
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