Long-Term Car Insurance Policy Meaning, Benefits and Reasons to Buy

Long-Term Car Insurance Policy Advantages

Do you know buying a long-term car insurance policy can get you more benefits than buying regular yearly policies. Let us find out what all benefits you can earn from long-term auto policy and how?

It is mandatory for everyone with a car to have a car insurance coverage, especially the third-party insurance to take care of the third party liabilities that might arise because of an accident. A car insurance policy comes with a specific tenure, which can be between one year to three years.  A policyholder is required to renew the car insurance policy online before it expires so that he/she can avoid any kind of penalties and can enjoy coverage of their vehicle all the time.  That is the reason it is recommended to buy long-term best car insurance policies. Let’s understand the long-term and multi-year car insurance policies.

What is Multi-year or Long-Term Car Insurance Policy?

A long-term comprehensive auto insurance policy offers coverage against both third-party liabilities as well as against your own car damages caused due to accidents and other natural and man-made disasters. Further, it also compensates the insured in the event of personal injury or disability.

In case of death of the policyholder, the nominee of the insured receives a death benefit on behalf of the insurer.  Also, the added benefits that can be availed with a multi-year comprehensive policy include add-on coverage, riders etc.

There are many benefits of Long-term insurance policies over other insurance types available for car owners. These long-term policies especially suit such people who generally miss their renewal dates and  deadlines or who remain very busy remembering these dates every year.

Arrival of Multi-Year Car Insurance Policy

In 2018, a new act by the Supreme Court made it compulsory for every new car owner to buy a three-year third-party long-term car insurance in India.  This way, they wanted to ensure a longer duration of protection against third-party liabilities by the car owner. However, unlike third-party policies, the Own Damage insurance plans require yearly renewal. This becomes tedious for many policyholders to renew their car insurance policy every year. Further, in such cases the insured need to renew the Own damage insurance along with maintaining a third-party cover, which also becomes costly.

So, to solve this problem, insurers came with multi-year or long-term insurance policies to offer extended coverage of three or more years so that the insured can stay worry-free from renewing policy on every year basis.

5 Benefits of Long Term, Multi-Year Car Insurance Policies

Below are some of the benefits that can be enjoyed with long-term car insurance policies:

1. These policies make it convenient for policyholders – There are many policyholders who tend to forget the renewal date of their policy and miss their premium payments. This becomes very frustrating for them as it makes them lose many important benefits. With long-term car insurance policies, the insured can eliminate the yearly renewal hassle of their policy. This is especially helpful for people who are too busy and are managing multiple commitments. Also, this way you can avoid the thorough checking of your car that many insurers ask for before renewing your policy, which might even raise the premium.
2. These policies allow lower risks – Suppose you miss renewing your car insurance and the policy expires and at the same time, you undergo a damage in your car.  In such a situation, you might have to go through expenses beyond control, which has to be borne by you.  And if the damages were caused due to an accident, the situation further deteriorates.  However, with car insurance long-term, you can stay away from such risks. Further, with long-term insurance you are not compelled to get your car examined before renewing the policy every year and it saves money as well.
3. You can stay protected from Price Hikes – Almost every year insurance companies hike their policy prices by renewing or modifying the policies. If you buy multi-year car insurance online, you could easily save as much as 20-40 % of hikes on your yearly renewal charges.
4. Extra Discounts – With a Multi-year auto insurance policy, you can even get a discount. Since multi-year policies cover you for a long duration, they may be costly. Thus, many insurers offer discounts on these multi-year policies. Further, there are discounts offered in case your car is fitted with anti-theft devices, or if you are a member of a recognized automobile organization etc.
5. No-Claim Bonus (NCB) Transfer  – Another benefit of long-term insurance for cars is that it allows the insured to carry forward the no-claim bonus of the previous year to the next year if you haven’t made any claims in the earlier year. In fact, some insurers allow greater NCB with long-term, multi-year policies as compared to short-term policies.  Further, here you also get the option of transferring your accumulated NCB in case of buying a new vehicle or selling the old one.