Car insurance expiry soon? Here's all you need to know about renewal before you miss out on 'No Claim Bonus' benefits

One must always extend existing car insurance policy before its expiry date as missing this deadline can have consequences. To ensure continuous coverage of the vehicle against financial losses and protection of hard-earned No Claim Bonus (NCB) benefits, one must stay vigilant with respect to insurance cover. Moreover, timely renewal of policy guarantees protection against accidents, theft, natural disasters and third-party liabilities.

NCB, which is associated with a Comprehensive car insurance policy, rewards safe driving. It is a discount earned for each claim-free policy year on the own-damage component which can reduce premium by 20% for the first year and as much as 50% on fifth consecutive claim-free renewal. In case a vehicle owner raises minor claim, NCB bonus will become zero and the car owner will become ineligible for discounts.

A lapse does not mean immediate forfeiture of the accrued NCB. The vehicle owner has 90 days window under which the comprehensive motor insurance policy can be renewed and accumulated NCB can be claimed, according to the Insurance Regulatory and Development Authority of India (IRDAI) guidelines.

Other instances where NCB will be terminated is in case of an accident, until and unless the insurer recovers the loss amount for the guilty party. In case NCB is not transferred by the policyholder to the insurer during a stipulated period of time, it can result in lapse of NCB.

If one misses the renewal deadline, the vehicle owner becomes financially exposed if an accident occurs due to a break in insurance coverage. Once the policy has expired, the insurer may consider an inspection of the vehicle before renewing the cover. The renewal process goes beyond vehicle inspection and could have financial and legal implications.

Even during the time period, the insurance cover renewal is being processed after the expiry date, driving without valid third-party insurance can attract legal and financial implications. Hence, a vehicle owner must start the renewal process at least 60 days before expiry, as per IRDAI guidelines. This gives sufficient time to compare coverage, Insured Declared Value, (IDV), deductibles and add-ons instead of selecting a policy on premium alone.

Notably, NCB is linked to the car owner rather than the vehicle which implies that No Claim Bonus can be transferred to a new vehicle or insurer at the time of policy renewal, provided the policyholder submits the required proof.

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