All You Need To Know Break In Period In Car Insurance

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 the legal hassles but also the financial risks.

However, purchasing or renewing your car is not that easy. You need to take a number of decisions such as the type of policy you want to purchase, 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 jargons related to the car insurance policies.

One such term is “Break-in Period” in a car insurance policy. In this article, we’ve tried to elucidate what exactly is 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 “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 1^st March and you renew your policy on 15^th 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.

Why should you renew your policy on time?

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 a 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 the 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 to lose your accumulated NCB. However, if you renew your policy within the maximum break-in period of 90 days, your NCB will be reinstated.

In 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. And 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.

Else, 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 tend to forget the policy renewal date, you can set a reminder in 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 nominal extra cost that can significantly boost the coverage of your car insurance policy.