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Break-in Period in Car Insurance

A break-in period in car insurance occurs when a policy isn't renewed before expiry. This results in loss of coverage, potential penalties, and possible higher premiums. Renewing on time retains benefits like No-Claim Bonus and ensures continuous protection against financial and legal liabilities.

  • 06 May 2025
  • 6 min read
  • 2761 views

As per the Motor Vehicles Act of 1988, a car insurance policy is mandatory for all motor cars running on Indian roads. As per the latest amendment to the act, driving a car without a valid car insurance policy can attract a penalty of up to ₹ 2,000 or imprisonment of up to 3 months or both. Hence, non-renewal of your car insurance in time can bring not only legal hassles but also financial risks.

However, purchasing or renewing your car is not that easy. You need to make a number of decisions such as the type of policy you want to purchase, the selection of add-on covers, choosing the insurance provider, etc. In order to make an informed decision, you need to be aware of the different terms and jargon related to car insurance policies.

One such term is the “Break-in Period” in a car insurance policy. In this article, we’ve tried to elucidate what exactly a break-in period in car insurance and why it is important for you to know about this term before buying a car insurance policy. Let’s get started.

What is a break-in period in car insurance?

A car insurance policy is an annual contract that needs to be renewed every year. If you look at the policy document carefully, you will find that the date from which the insurance cover came into effect and the date at which it will terminate is clearly mentioned in the document. To ensure legal compliance, you need to renew your car insurance policy before this expiry date.

However, due to your busy schedule, you may sometimes forget to renew your car insurance policy in time. And if you miss the deadline to renew the policy, even by a day, it results in a break in the policy. However, most insurers allow a 90-day grace period to renew your car insurance policy. By renewing your policy within this period, you won’t lose the No-Claim Bonus benefit. You may still have to go through car inspection depending on your insurance company policy.

The time period between the last date for the renewal of your car insurance policy and the date on which it is actually renewed is known as the “Break-in Period” of the policy. For example, if your policy renewal date is 1st March and you renew your policy on 15th April, then there will be a 45-day break in the policy, which will be known as the break-in period.

Your car insurance policy remains inactive during the break-in period and any financial or legal liabilities arising during this time will have to be borne by you.

Consequences of not renewing car insurance during the break-in period

It’s crucial to renew your car insurance policy on time and avoid any break in the policy. It’s because it can bring in several legal as well as financial hassles.

  • No third-party cover

As per the Motor Vehicles Act, a valid third-party motor insurance cover is mandatory for every vehicle running on Indian roads. If you don’t renew your car insurance policy on time, it will leave you without third-party cover. And if you’re caught driving a car without a valid third-party insurance cover, you may be penalised with a fine of ₹ 2,000 by the traffic cops.

Moreover, if your car gets involved in an accident during this period and causes damages to a third party, you will have to bear the entire legal and financial liability out of your own pocket.

  • No own damage cover

While an Own Damage (OD) cover is not mandatory, it is highly recommended for every car owner. It provides financial security to the vehicle against the damages caused by mishaps such as collision, theft, vandalism, fire, natural disasters, etc.

If you don’t renew your OD cover in time, your car will get exposed to financial risks and in case it meets with an accident, you may have to pay for the loss out of your own pocket.

  • No-claim Bonus

No-claim bonus (NCB) is the benefit given by the insurance providers to the policyholders for every claim-free year. This benefit is given in the form of a discount at the time of policy renewal. If you fail to renew your policy within the due date, you stand a chance of losing your accumulated NCB. However, if you renew your policy within the maximum break-in period of 90 days, your NCB will be reinstated.

Myths about car insurance break-in period

Some of the myths about the car break-in period are:

  • Myth 1: You can file claims during the break-in period.
    • Reality: The break-in period provides no active coverage; hence, claims cannot be made.
  • Myth 2: Renewal premiums are always higher after a break-in period.
    • Reality: While some insurers may increase premiums due to risk factors, competitive options are still available.
  • Myth 3: The break-in period is the same for all insurers.
    • Reality: The duration and policies regarding the break-in period vary across insurance providers.

Benefits of renewing car insurance on time

The advantages of renewing car insurance on time are:

  1. Continuous coverage: This ensures that the car remains insured without any gaps.
  2. Retention of No Claim Bonus (NCB): Timely renewal allows policyholders to retain their accumulated NCB in car insurance.
  3. Avoids legal issues: Ensures compliance with motor vehicle laws.
  4. Peace of mind: Reduces the risk of financial losses due to accidents or damages.

Disadvantages of a break-in period in car insurance

The demerits of having a break-in period are:

  • Risk of uninsured damages: The owner will have to bear any repair or replacement expenses during this period.
  • Higher premiums: Some insurers might increase the premium if a policy lapses.
  • Tedious renewal process: Some insurers may require a fresh vehicle inspection during renewal, delaying the process.

How to renew car insurance during the break-in period?

Follow these steps to renew your car insurance during the break-in period:

  1. Contact the insurer: Reach out to your insurer and inquire about renewal procedures.
  2. Get vehicle inspection done: Some insurers require a vehicle check before policy renewal.
  3. Compare plans: Consider switching to a better policy if the previous one doesn’t meet your needs.
  4. Renew online: Most insurers allow you to renew car insurance online, following a quick and easy process.

FAQs

  1. Can I drive my car during the break-in period?

No, driving without valid insurance is illegal and risky.

  1. Will I lose my No Claim Bonus (NCB) if my policy lapses?

Yes, if you do not renew within the grace period, NCB benefits may be lost.

  1. How long does the break-in period last?

It varies depending on the insurer but typically lasts a few days to weeks.

  1. What is the grace period for car insurance?

The grace period in car insurance is the time frame the insurer allows to renew the policy without lapse or loss of benefits. It varies based on each insurance provider.

  1. What is the penalty for expired car insurance?

If you are caught driving a vehicle without valid insurance, you may face a fine of ₹2,000 and/or a jail term of up to three months for the first violation. For a second offence, the penalty increases to ₹4,000 and/or up to three months of imprisonment. Remember that these penalties are subject to change based on amendments to the Motor Vehicles Act.

Conclusion

Renewing your car insurance policy before the due date is very important. By failing to do so, you not only expose your car to certain financial risks but also can attract legal punishment. If by any means, you forget to renew your car insurance in time, you must do so within the allowed break-in period, i.e. a maximum of 90 days from the policy expiry date.

Otherwise, you may lose out on the NCB benefit and may have to get your car re-inspected by the insurer. If you’re a person who tends to forget the policy renewal date, you can set a reminder on your smartphone or sign up with your insurer to receive notifications about the renewal date through e-mails and SMS alerts.

With ICICI Lombard’s car insurance policy, you can renew your policy online every time, without any hassles. Besides, we offer unique additional covers at a nominal extra cost that can significantly boost the coverage of your car insurance policy.


Disclaimer: The information provided in this blog is for educational and informational purposes only. It may contain outdated data and information regarding the Insurance industry and products. It is advised to verify the currency and relevance of the data and information before taking any major steps. ICICI Lombard is not liable for any inaccuracies or consequences resulting from the use of this outdated information. 

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