Have you ever forgotten to pay your utility bills or credit card dues on time? If so, you would be aware of the difficulties that it brings in the form of penalties and disruption of services. The same applies to car insurance premiums.

The consequences

While there are instances when one can genuinely forget renewing the motor insurance premium, some vehicle owners intentionally do not renew the motor insurance policy of their vehicle to save a few hundred rupees on the premium. In the process, you expose yourself to financial liability in terms of any repairs that may be required. More importantly, any compensation to the family of the deceased involved in an accident becomes the responsibility of the vehicle owner. Thirdly, you also lose out on accumulated benefits (No-Claim Bonus).

NCB is the discount that you get on the vehicle’s premiums for each year that you don’t make a claim and can go as high as 50 per cent for a continuous track record of no claim. In case your vehicle remains uninsured for more than 90 days, you shall lose the accrued benefits of NCB. In the process, you also cannot transfer the NCB to the new vehicle if you were to purchase one. Premium for a new and higher end vehicle will be far more than an old vehicle. As such, losing on NCB benefits can lead to a lost opportunity in terms of paying lower insurance premium on your new car.

Time-consuming

Reinstating a lapsed policy also takes time and effort as it would mean following the procedure applicable while buying a new motor insurance policy. Having said this, if you are applying for a third party motor insurance cover, the process is not too difficult and an insurance company will offer the policy even after a break.

However, if you are opting for a comprehensive policy, which is the more preferred cover, you will have to go through a slightly longer process.

If a lapsed comprehensive motor insurance policy requires renewal, one needs to fill up a fresh proposal form akin to insuring a new vehicle. Also, it becomes imperative for the insurance company to inspect your vehicle. The inspection is done to document any pre-existing damages to the car. These damages will not be covered by the insurance company in the future even though it may decide to insure the vehicle. One must note that the insurance company may charge a higher premium for a vehicle whose policy has lapsed or may even decide to reject the insurance proposal.

Given the multiple losses from letting your car insurance lapse and complications in renewing a lapsed policy, it is prudent to renew on time. Nowadays, insurance companies notify customers regarding policy renewal through emails and SMS alerts. With technology at your finger tips, online/mobile renewal of policy is a simple task. Online renewal also provides the benefit of receiving a digitally signed policy immediately.

The writer is Head – Motor Underwriting & Claims, ICICI Lombard

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