Things No One Will Tell You About a Lapsed Car Insurance Policy
With car insurance being a legal mandate for driving a car in India, it is essential to buy and renew your car insurance policy on time. Major car insurance providerslike Tata AIG offer a seamless online renewal facility. You can also opt for the renewal reminder, where you get calls, texts or emails from the insurer reminding you to renew your policy on time. However, there can be times when you forget to renew our policy on time.
So, what happens then? Does the policy lapse immediately, or do you have any grace period? Can you renew a lapsed policy? Read on to know some things no one will tell you about a Lapsed Car Insurance Policy. But first, let us understand what a lapsed car insurance policy is!
What is a Lapsed Car Insurance Policy?
To put it simply, a lapsed car insurance policy is one that was not renewed on or before its date of expiry. Car Insurance Policies are valid for a specific amount of time. The validity of the insurance cover, including the expiry date, is mentioned on your policy document. It is important to renew your policy on or before the expiry date to avoid the policy expiring or lapsing.
A lapsed car insurance policy is dangerous for two significant reasons:
- Driving with a lapsed policy can attract heavy fines or even imprisonment in some cases.
- If there an accident or even minor damage to the car, you will have to pay the charges from your own pocket.
It is illegal to drive with a lapsed car insurance policy
As per the Indian Motor Vehicles Act, all car owners must have an active car insurance policy while driving their vehicles on the road. The new Motor Vehicles (Amendment) Act of 2019 lays down strict fines and punishment for driving with no or lapsed car insurance policy. The applicable fines are:
- First Offence: ₹2000 and/or 3-month imprisonment
- Second Offence: ₹4000 and/or 3-month imprisonment
Therefore, it is imperative to renew your policy on time. However, if your policy does lapse, you can still renew it. How? Let’s find out!
You can renew a lapsed car insurance policy and retain the benefits as well!
The simplest way of renewing your lapsed policy is going to the insurer’s website for renewal. Go to the car insurance renewal section, input the necessary details – old policy number, select or delete any add-ons, avail applicable discounts and make the payment.
All insurance companies have different approaches when it comes to inspection of the car after policy expiry. If you renew the lapsed policy within a week of the expiry date, no inspection is required. Insurers like Tata AIG offer a ‘grace period’ of 90 days, within which you can not only renew your policy without inspection but also retain your No Claim Bonus. After 90 days of policy expiry, it is mandatory to get your car inspected insuring it.
You will lose your No Claim Bonus post the grace period
No Claim Bonus is offered by the insurance companies to the policyholders as a reward against a claim-free policy tenure. Most car insurance companies allow you to avail the accumulated No Claim Bonus up to 90 days from the insurance expiry date. Post the 90-day grace period, you lose your No Claim Bonus.
You can change your provider while renewing a lapsed policy
Yes, you can choose to renew your lapsed car insurance policy from a different insurance provider as well. Most insurance companies allow you to migrate your policy during renewal. It is common, as well as advisable, to review your coverage while renewing. If the features and the service offered by your existing insurance provider is not up to the mark, you can renew your policy with a different provider.
You can even renew a lapsed policy with another company. Some insurers may inspect your car before renewing your insurance with them. If renewed within the grace period, you can even transfer your No Claim Bonus to the new insurer.
5 Things to Remember When Your Car Insurance Policy Expires
When a car insurance policy expires, your car is open to all risks. You will not receive any cover benefits from the insurance company for any damage caused. No matter the extent of damage, or even theft, you will have to bear the expenses on your own. Thus, in the case of lapsed car insurance, always keep in mind the following things:
- Immediately inform your insurance company and enquire about the next steps.
- Do not drive your car without a valid and active car insurance policy.
- Renew the lapsed policy as soon as possible
- Buy a new policy if you have exceeded the grace period.
- Set reminders and sign up for alerts to avoid this situation the next time.
Having an active car insurance policy offers dual benefits – legal compliance and financial protection. So ensure that you always keep your eye out for the insurance expiry, and renew your car insurance policy on or before the car insurance policy expiration date!