Significance of grace period in car insurance renewal

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The insurance grace period is an important factor in the context of your car insurance because in this period you can renew your existing coverage without any extra cost.

Every car insurance policy is active for one to three years at the most. Once the policy expires it is no longer legally valid and you have to renew it again. Usually, these policies are valid for around a year. As per the rules laid down by the IRDAI (Insurance Regulatory Development Authority of India), all car owners need to insure their policies before the policy expires. This is the reason why the insurers normally provide a grace period ranging from 15 to 30 days in these cases.

If you do not renew the policy even within the car insurance renewal grace period your agreement with the insurer would become null and void. This means that as per law you do not have any coverage for your car. This is where the grace period in question comes in so handy as it lets people renew their auto insurance policies without losing any benefit that they may get from such a policy.

What happens with the expiry of car insurance?

As we have said already, the thing that happens first, in this case, is the complete nullification of your agreement with the insurer.        

This means that you have to face the following financial and legal consequences when you do not renew your policy even within the new vehicle insurance grace period:

  • zero protection or coverage
  • losing out on no-claim bonus
  • legal consequences
  • re-inspection
  • zero third-party liability

If your auto insurance policy lapses it implies that you lose your right to make a claim in case something wrong happens to your car. In such cases, your insurer would not have any obligation to cover the losses that you may suffer.

You may have not raised any claim within a year. However, if you have not renewed your car insurance policy you lose that benefit. The time that you have in this case is 90 days from the expiry of the policy. If you do not renew your policy within the policy period you could get imprisoned as well. At the very least you would have to deal with hefty fines and plenty of challans. It is illegal just as driving without a proper driving license. If you did not renew your policy within the right time the next time you want to do so the car insurer will inspect your car again.

If you do not have car insurance you would have to face all the legal liabilities in case you injured another person and/or their property in an accident all by yourself.

Also Read: How to Renew Car Insurance Policy Online in India – A Complete Guide

What is the grace period?

Has your car insurance policy lapsed before you could insure it? Are you worried? Well, you do not have to do so as these days a lot of insurers provide days of grace in insurance where you can renew the policy. Usually, this is estimated to be around 15 to 30 days after the original date when the policy coverage ended. However, you should know that you are still without car insurance coverage in this period since these days are not regarded as an expansion of the same. Your car insurance is still in a lapsed state.

This means that any claim that you raise within the grace period for car insurance renewal would be straightaway rejected by the insurer. This is because the policy is no longer valid in this duration. All you have in this period is the chance to renew your existing policy with a payment of the premium that you have to for it.

Why is it important to renew your policy during the grace period?

In India, the car insurance grace period normally ranges from 30 to 90 days. However, this depends on which company you have bought the policy from. The grace period is provided for the policyholders so that they can renew their policies at the quickest. This also allows them to drive without flouting the laws of India and also retain the benefits that their policy provides. The major benefits of the grace period provided by insurers are the ability to retain the no-claim bonus, no vehicle inspection, and lower premium costs.

When you renew your policy during the grace period after insurance expires you need to ensure that you do not lose out on the no-claim bonus that you have accumulated in the previous coverage period. Usually, car insurers inspect a car if the policy is being renewed after it has lapsed. However, if you renewed within the grace period the insurer might waive off that inspection. If you renew the policy within the grace period you also do not have to pay higher premium to do so. You can get the chance to continue within the existing cost structure of the policy.

What should you do when your auto insurance expires?

First of all, you need to get in touch with the insurers in these cases and talk to them about renewing your policy within the insurance grace period. In case you are thinking about choosing another carrier or going for a new plan altogether with a different type of coverage you must compare all the options that you have beforehand. This way, you would be able to choose the one policy that suits you the best. However, you must also talk with the insurer and ask if it would be willing to let you use the no-claim bonus that you accumulated in the previous coverage period.

Conclusion

Renewing your policy within the insurance grace period is just as vital as buying the same in the first place. It is very important that you at least renew your policy prior to its expiry. Otherwise, as you have seen above you may have to face some serious consequences. If you have not renewed your policy before its actual expiry date at least make sure that you do so within the grace period so that your coverage does not lapse.

Mar 20, 2022
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PayBima Team
PayBima is an Indian insurance aggregator on a mission to make insurance simple for people. PayBima is the Digital arm of the already established and trusted Mahindra Insurance Brokers Ltd., a reputed name in the insurance broking industry with 17 years of experience. PayBima promises you the easy-to-access online platform to buy insurance policies, and also extend their unrelented assistance with all your policy related queries and services.

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