Knowledge Centre

Benefits of Long Term Car Insurance Policy

Published on June 19, 2020. EST READ TIME: 5 MIN

What is car insurance?

Car insurance can be defined as an agreement by which the insurance provider commits to covering your car against any damages or losses caused due to an accident involving the insured car. A car insurance policy helps in providing coverage against theft, accidents, or any other liabilities. For availing the benefits associated with a car insurance policy, you need to pay the premium associated with the car insurance policy regularly.

According to the Motor Vehicle Act, 1988, a third party car insurance policy which provides cover against third party liabilities is mandatory in India. Moreover, you can purchase a comprehensive car insurance policy to ensure the complete protection of your car.

Importance of car insurance

Car insurance is important due to the major reasons which are mentioned below.

  • Third-party car insurance policy would provide coverage against legal liabilities to the third party in an accident, damages caused to third party vehicles or injuries caused to third party persons in an accident.

  • A comprehensive car insurance policy would include third party liability cover and own-damage cover. The own-damage cover provides cover against natural calamities, manmade disasters, damage caused to the car due to transit, etc. Moreover, a comprehensive car insurance policy also offers personal accident cover for the owner/driver of the car which covers injuries or death due to accidents.

  • Car insurance policies help you to remain stress-free while you are driving as you have protection against the damages or losses caused due to accidents on roads.

  • A car insurance policy will also be helpful to your family and can provide financial support if you have suffered from some serious injury or disability due to accidents.

  • There are various discounts and additional offers like No Claim Bonus (NCB) associated with car insurance policy. This can help in obtaining a discount on the car premium if there are no claims during a policy year.

How is long term car insurance beneficial?

To reduce the number of non-insured cars and accidents on the roads, the Supreme Court of India has made it mandatory for all vehicles which were bought on or after 1st September 2019 to be covered by long term insurance policy. For car owners, the long term third party car insurance policy would be for 3 years.

The major benefits of long term car insurance can be listed below.

  • Convenience A long term car insurance policy will help in getting rid of the hassles involved in getting your car insurance renewed regularly. With a busy and hectic lifestyle, it is difficult to remember the exact renewal dates of the car insurance policy. This can lead to a lack of coverage and exposure to several risks while driving the car. So, a long term car insurance policy will help in providing convenience.

  • No issues associated with renewal Sometimes, if your car insurance policy has lapsed, during the process of renewal many insurance providers tend to have an inspection of your car. However, with a long term car insurance policy you will not be able to face this type of inspection for a long period.

  • Discounts There are lucrative discounts offered by various insurance providers mostly for the long term car insurance policies. With long term car insurance policies, the policy issuing costs and administrative costs are reduced and these savings of the companies are passed on to the policyholders in the form of offers and discounts.

  • No risks associated with non-renewal There are several risks associated with the non-renewal of car insurance policies such as any repairs or replacement need to be paid off from your pocket if you have not renewed your car insurance policy on time. However, with a long term car insurance policy, you will not have to face such consequences for 3 years.

  • Premium changes If there is an increase in premium of the third party car insurance policy annually, then with a long term car insurance policy, you will not be affected by the increased premium rates for 3 years.

  • Higher No Claim Bonus (NCB) Long term car insurance policies offer higher NCB when compared to that of the cumulative NCB in case of short term policies.

Conclusion

Hence, long term car insurance policies are advantageous except for the fact that you cannot cancel the insurance policy for 3 years. So, it is advisable to have thorough research, comparison, and then purchase your car insurance policy.

This blog has been written by

S. Gopalakrishnan | Motor Insurance Expert | 40+ years of experience in insurance industry

A veteran in insurance industry. S. Gopalakrishnan is a name to reckon with in the field of reinsurance, he has headed the Reinsurance department and has rich experience in other fields of motor insurance. He loves to share his opinion on latest topics in the insurance industry and how he can help people in safeguarding their assets using insurance products.

Mr.S. Gopalakrishnan recommends "HDFC ERGO for your vehicle insurance needs, it has always put customer’s interest at the forefront, with round the clock assistance to deal with emergency breakdown issues and hassle free claims process. You can be assured of complete and reliable guidance through the whole process." 


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