You may have heard that a car insurance policy must be renewed annually. People consider renewing car insurance yearly to be a tedious task that they avoid entirely. As a result, they are not only breaking the law but also putting themselves in severe financial jeopardy.
To avoid this situation, the insurance regulatory and development authority of india (IRDAI) has made multi-year policies mandatory for car owners beginning September 1st, 2018.
As the name implies, a multi-year car insurance policy is valid for more than one year. The car owner is not required to renew the policy every year. This also implies that financial cover can last longer. It’s wise to check car insurance online to understand these better.
First, let’s determine which aspects of a car insurance policy are required.
The required aspect –
The Motor Vehicles Act of 1988 makes purchasing a car insurance policy mandatory in India. According to the new rule, every car owner must buy at least a multi-year third-party insurance policy for their vehicle. Existing car owners can continue to buy short-term insurance policies. It is not required to purchase own damage insurance. As a result, purchasing a comprehensive car insurance policy may not be required.
As the name implies, a third-party car insurance policy protects the policyholder from financial losses caused to a third party. A third party is anyone other than the owner or passengers of the insured vehicle. As a result, other drivers, pedestrians, hawkers, and so on would be considered third parties. Without third-party insurance, the owner would be responsible for all expenses incurred.
Consider driver A, who owns a hatchback car and is in an accident, with driver B, who owns a sedan car. If driver A is found to be at fault for the accident, any damage to driver B’s vehicle must be borne by driver A. It is common knowledge that repairing/replacing parts on a sedan car is expensive. In this case, third-party insurance can come to the rescue of driver A. Without it, he would have to pay the entire bill out of his pocket.
Options for coverage for multi-year policies –
- Comprehensive long-term policy:
A car owner can purchase multi-year third-party (TP) car policy and multi-year own-damage (OD) car insurance. This is ideal if you remember to renew your car insurance plan in a timely manner.
Purchasing such a comprehensive multi-year policy can benefit you in the long run because your premium would be protected from yearly increases. However, compared to the following options, the cost of this policy can be slightly higher.
- TP in the long run and OD in the short term:
The next option is to purchase three or more years of third-party car insurance as well as one year of own damage coverage. Your policy may be less expensive than a long-term comprehensive policy, but the option of annual renewal would be available. To remain financially protected against damage to your car, you must renew the own damage component of your car insurance policy each year.
- Long-term third-party protection:
Another option is to forego purchasing the own damage component entirely and instead opt for multi-year third-party insurance. This is the most cost-effective option; however, remember that any damage to your car may not be covered, and you may be responsible for all expenses related to your damage. Despite purchasing car insurance, this option may leave you underinsured.
In conclusion –
To abide by the law rightly, you must purchase third-party car insurance online or offline. This can ensure financial security. Purchasing third-party car insurance online can be the most convenient and beneficial option, outperforming their offline counterparts.
* Standard T&C Apply
# Visit the official website of IRDAI for further details.
Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.