If you own a car or wish to purchase one anytime in the future, then you must know how important it is to hold a car insurance policy as well. Firstly, you need to note down your budget and accordingly choose the type of insurance cover that you want, either third-party liability or a comprehensive policy. Once you’ve selected the insurance cover that suits your requirements, keep in mind that it is imperative to renew the policy annually. The process of car insurance renewal is essential to understand because it provides protection against the legal as well as financial liabilities that you might face as a result of damages caused to your vehicle or the third-party person or property. If the time has come to renew your car insurance policy or in case you’re confused as to how to go about it, then read the checklist mentioned below.
- Choose the type of insurance cover
As mentioned earlier, you must first decide the type of insurance cover that you want. It is advised that you purchase a comprehensive policy if your car is brand new as you will receive compensation if any damages are caused to your car. Also, in case you have caused damage to the third-party property or injuries to a person that too shall get covered under this policy. Indeed the premium amount for comprehensive cover will be more than that of the basic third-party cover. This is because a third-party liability policy will only provide compensation for damages caused to the third-party. If you do not choose any of the two policies, you can fall into legal trouble because as per the law, it is mandatory to have at least a third-party car insurance policy.
- No claim bonus (NCB)
In case you’re wondering what happens if you do not make a single claim in one policy year, then good news for you is that you receive a concession on the premium amount during insurance renewal as a reward for safe driving and not raising claims. The concession you receive is in percent and the highest you can get is 50% of concession on the premium amount for consecutive five claim-free years. However, note that if you raise a claim for even minor damage, you will lose all the accumulated No Claim Bonus (NCB). Also, on the expiry of your insurance policy, you receive a grace period of about 30 days after you’ve passed your renewal date. If you do not renew the policy even then, you lose the benefits of availing an NCB certificate from your old insurer.
- Add-on covers
Additional covers are like a boon to every car owner. If you choose the right ones, you will never feel underinsured. You must review your policy every year and keep a check on the add-on covers that you can purchase during car insurance renewal, or you can eliminate the ones that you don’t require anymore.
There are various add-ons to choose from, for eg. if you go for a Zero Depreciation cover, the depreciation factor won’t be considered by your insurer while providing coverage, and you receive full compensation. This way, the claim amount won’t burn a hole in your pocket, and you can enjoy an enhanced coverage.
Renewing your motor insurance policy yearly is essential, or it will be considered invalid, which means you will be falling on the wrong side of the law. This can lead to huge penalties, or worse case you can land in jail.