Have you ever forgotten to pay your utility bills on time or experienced a situation where you missed paying the minimum dues on your Credit Card outstanding? If so, you would be aware of the difficulties that one faces when paying the dues apart from the penalties that apply in terms of monetary as well as disruption of services.
In addition to imposing penalties, financial institutions these days keep a stringent eye on your credit worthiness as well as the repayment pattern of your dues before extending additional credit or providing you mortgage. Institutions consider your credit score which gives a clear track record of one's credit repayment history across all instruments including personal loans, home loans, credit cards etc.
Non-payment or late payment of dues is not limited to loan products but applies to motor insurance as well. In this case, one can face huge amount of inconvenience if the
motor insurance policy is not renewed on time. A motor insurance policy is an annual contract which requires renewal every year. Usually the policy is effective from midnight from the day one purchases the policy. In case you miss out on renewing the policy, your policy will break. This means, you will need to purchase a fresh policy from an insurance company who is willing to cover your vehicle again.
While there are instances when one can genuinely forget
car insurance renewal premium, it is a known fact that several vehicle owners intentionally do not renew the motor insurance policy of their vehicle - a mandatory requirement - to save a few hundred rupees on the premium. In the process, they expose themselves to financial liability in terms of vehicle repair apart from losing accumulated benefits. More importantly, any compensation to the family of the deceased involved in the accident becomes the responsibility of the vehicle owner.
Whatever be the reasons, if you forget renewing your vehicle's motor policy even by a day, the same will lapse and reinstating the policy would mean following the procedure applicable while buying a new motor insurance policy. Having said this, if you are applying for a third party motor insurance cover, the process is not too difficult and an insurance company will offer the policy even after a break in. It must be noted that the insurer will not cover any claim on the vehicle during the period when the vehicle was uninsured. However, if you are opting for a comprehensive policy, which is the more preferred and opted for cover, you will have to go through a slightly longer process.
If a lapsed comprehensive motor insurance policy requires renewal, one needs to fill up a fresh proposal form akin to insuring a new vehicle. Also, it becomes imperative for the
insurance company to inspect your vehicle. The inspection is done to document any pre-existing damages to the car. These damages will not be covered by the insurance company in the future even though it may decide to insure the vehicle. One must note that the insurance company may charge a higher premium for a vehicle whose policy has lapsed or may even decide to reject the insurance proposal.
Lapsed policies also lose the benefits that you may have accumulated in terms of NCB (No Claim Bonus). NCB is the discount that you get on the vehicle's premiums for each year that you don't make a claim and can go as high as 50% for a continuous track record of no claim. In case your vehicle remains uninsured for more than 90 days, you shall lose the accrued benefits of NCB. In the process, you lose out on the benefit of transferring NCB to the new vehicle if you were to purchase one. Premium for a new and higher end vehicle will be far more than an old vehicle. As such losing on NCB benefits can lead to lost opportunity in terms of paying lower insurance premium on your new car.
Given the multiple losses and complications towards renewing a lapsed motor insurance policy, it is prudent to renew on time. Nowadays, insurance companies notify customers regarding policy renewal through emails and SMS alerts. With technology at your finger tips, online/ mobile renewal of policy is a simple task. Online renewal also provides the benefit of receiving a digitally signed policy immediately.