How to Deal with a Lapsed Car Insurance Policy?

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You just realised your car insurance policy lapsed a few days ago. I understand you were not well, you had a breakup or your dog was not well, youwere engrossed in your work or you were just lazy, the reasons could be plenty but the reality is that now you’re in trouble. 

Your car insurance is an annual contract that you need to renew to keep it active. Your policy document clearly states the time and date from which your cover becomes effective and the date and time when it will be expired. To ensure the effectiveness of a car insurance policy, it is necessary to renew it before the expiry date. If you miss renewing your policy, even by a day, your car insurance policy will have a break. It means, instead of renewing your policy, you will need to purchase a new car insurance policy. If this is a situation, it could lead to policy rejection or subsequently higher premium. Here is what can happen in case you forget to renew your motor insurance policy=

In case of third-party insurance cover

A third-party car insurance cover insures loss or damages caused to the other vehicle or pedestrians or third party property due to your vehicle. As per Indian law, it is mandatory to have a third-party insurance to ply your vehicle on a road. In case you fail to renew your third-party policy, you can’t take your car on the road. However, a break in renewal doesn’t impact this cover as the insurer can’t reject your policy renewal application. Being a mandatory cover, the insurer will offer you the cover even after a break. However, the insurer will not cover any loss or damage that may happenbefore the policy renewal.

In case of own-damage (OD) insurance cover

There could be serious aftermaths in thecase of own-damage cover. In the case of abreak in a car insurance policy renewal, the insurer will inspect a vehicle before issuing the policy. It is done to document any pre-existing damages that the insurer will not cover in the future. Note, it will be applicable only in case of partial damages and not in thecase of total loss, like theft, where the insurer will pay the entire sum insured.

Also, the insurer can revoke your no claim bonus (NCB) or give you a lower bonus. NCB is the discount that the insurer gives you if you don’t make a claim in a policy year. This discount is applicable only on the OD cover. So, every year, when you don’t make a claim, you get an NCB, which can reach up to 50%, have a look:

NCB Rate Slab
After first claim-free year 20%
After two consecutive claim-free years 25%
After three consecutive claim-free years 35%
After four consecutive claim-free years 45%
After five consecutive claim-free years 50%

A refusal of NCB means, you will have to pay a higher premium for your cover. Also, if your vehicle has too many dents or damages, the insurer can reject your policy application altogether.

Overall, an expired car insurance policy is equal to no insurance policy. If anything happens to your vehicle, you will not get any coveragefor. For instance, if your car meets with an accident, you will have to manage all the expenses without any assistance. Also, you would have to pay Rs 2,000 in case the police caught you without insurance.

What is the right time to renew a car insurance policy?

The right time to renew a car insurance policy is 46 days prior to the date of expiry of the policy. You can also go for an automatic renewal mode,which will auto-renew your policy before its due date.

How to revive your lapsed car insurance policy?

Your car insurer may give some leeway and renew your policy like the usual manner, if only a few days have passed since your due date. However, if several weeks have passed, the insurer may not be as accommodating and treat your application as a new case.

To reinstate your policy, contact the insurer who will sendasurveyor to your place to inspect your vehicle and check any pre-existing loss or damage. Usually, 2-3 days might go in thesurvey and the insurer may also charge a nominal fee for this. Once the surveyis done, you can buy the new policy. Remember, the insurer can refuse to cover pre-existing damage or set a fixed deductible on that damage, which you would have to pay in case of a claim in the future.

As the surveyor inspection may take a few days, some insurers have launched a feature that allows customers to self-inspect their vehicles through mobile. Once you pay the policy renewal fee online, you can record and upload your vehicle’s video which will be inspected by the insurer. The updated policy is issued within a few hours. This procedure minimises the inspection time and lets you buy the policy instantly.

To conclude, as much as you enjoy living on the edge, driving an uninsured car is as safe as walking on atight rope. Not only, it poses a risk to your vehicle that you purchased from your hard-earned money, you also lose a lot in terms of premium. Allow me to be dramatic—you are doing something illegal!

So, do yourself a favour and keep your car insurance policy always active!

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