When purchasing a new four-wheeler in India, it’s mandatory to have motor insurance, at least in the form of third-party car insurance. This insurance cover is valid for a year and requires annual renewal. Surprisingly, over two-thirds of car insurance policies in India are not renewed on time and end up lapsing. It is seen that most four-wheeler drivers are without an active car insurance policy.
One of the primary reasons for this lapse is the yearly nature of the renewal process, with no grace period for paying the premium. Maintaining continuous and active four-wheeler insurance can be quite a hassle, requiring annual renewal before the last date. However, the IRDAI introduced a beneficial provision in September 2014.
It allows insurance companies like Tata AIG and others to offer three- and five-year third-party insurance covers for new cars, reducing the burden of frequent premium payments and renewals. With such long-term policies, you only need to worry about premiums and renewal once every three or five years. It offers a more convenient and hassle-free option, especially for four-wheeler owners.
Long-Term Third-Party Insurance in India
The 1988 Motor Vehicle Act states that all cars must have third-party liability insurance when operating on public roads. This type of insurance covers third-party individuals who may suffer physical injuries, property damages, vehicle damages, or death caused by the insured vehicle. It can be obtained either through a standalone third-party policy or as part of a comprehensive car insurance policy.
Besides the standard one-year car insurance policies, an option known as long-term or multi-year car insurance is available. A long-term car insurance policy provides coverage for three years/five years, offering extended protection for your vehicle. This type of policy can be a standalone, third-party car insurance or a combination of a three-year third-party insurance and a one-year own damage cover.
Should I Choose a Long-Term Third-Party Insurance
By opting for a long-term third-party car insurance policy, you can enjoy the convenience of not renewing your car insurance online annually. It provides coverage for multiple years, reducing the hassle of frequent renewals and ensuring that your vehicle remains protected for an extended period against every third-party-related legal and financial worry.
Since September 2018, new car owners in India have been lawfully required to have long-term third-party car insurance coverage. Non-compliance can result in legal consequences. However, those who bought cars before September 2018 can choose between long-term insurance or annual renewal.
To understand the importance of long-term third-party insurance, here is an example.
In a scenario where Mr. Rahul, driving an uninsured new car, injures a pedestrian in an accident, he becomes liable for compensation to the victim and faces the risk of fines and potential imprisonment. A long-term third-party car insurance policy would have allowed him to file a claim, avoiding the financial burden of compensating the victim and the legal penalties.
With long-term third-party car insurance coverage, Mr. Rahul could have protected himself from financial losses and legal repercussions of driving uninsured. Compliance with the law and having proper insurance coverage are crucial for personal and public safety.
Benefits of Having Long-Term Third-Party Insurance Coverage
Long-term third-party car insurance offers several benefits that vehicle owners can enjoy. Some of these benefits include:
With a long-term third-party policy, you do not have to stress over renewing your car insurance yearly. It provides coverage for multiple years, saving you the hassle of annual renewals.
- Cost Savings
Long-term policies often come with discounted premiums compared to annual policies. You can save money over the policy duration, as the premium remains unchanged for the specified period.
- Uninterrupted Coverage
By opting for a long-term policy, you ensure continuous coverage for your vehicle. There’s no risk of unintentional lapses or forgetting to renew the policy on time, offering you peace of mind.
- Protection Against Legal Consequences
A valid third-party insurance policy is a legal requirement in India. By going for a long-term third-party policy, you avoid the risk of driving without insurance and the associated legal consequences of non-compliance.
- Financial Protection
A long-term third-party policy provides the necessary financial security in the unfortunate event of causing injuries or damages to a third party. It covers your legal liabilities, including compensation for injuries, property damages, or even death.
Long-term third-party car insurance provides several advantages. It saves you the trouble of renewing your car policy every year. Aside from that, you may get more significant discounts, a higher no-claim bonus, and coverage for a more extended time, and you won’t have to worry about insurance policy price increases regularly.
Adding Own Damage Cover to your third-party insurance enhances your coverage, protecting you against a broader range of risks. When choosing a policy, compare car insurance plans from reputable insurers like Tata AIG and others. Assess their features, benefits, and costs to select the most suitable and competitive policy.