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Benefits of Purchase Long-Term Car Insurance?

  • Square Insurance
  • 16 Jun 2022
Benefits of Purchase Long-Term Car Insurance?

What is long-term car insurance, and what are its benefits?

There is a mandate for vehicle owners across the country. Under the Motor Vehicle Act of 1988, all vehicle owners must purchase third-party liability insurance. It is a type of vehicle insurance that protects third parties from injury, property damage, and death that may result from a road accident. However, others opt for a comprehensive policy, which offers more than just third-party liability coverage, although it is not mandated. Car insurance online usually has a 12-month validity period. However, most people find it extremely difficult to renew their insurance yearly. Those who have long-term auto insurance can benefit.

An insurance policy for long-term use of a vehicle in India

Long-term car insurance is a policy that covers your four-wheeler for three years. As it provides coverage to your car for several years, this policy is also known as multi-year car insurance.

Depending on your needs, you can choose either a 3-year third party insurance policy or a 3-year third party insurance policy with 1-year own damage coverage.

New car owners must buy long-term third-party insurance policies for their vehicles from September 2018 onwards, as mandated by India's Insurance Regulatory and Development Authority (IRDAI). There may be legal consequences for violating this law. A long-term car insurance plan is still available for people who bought their car before September 2018.

A new car driven by Mr. X causes an accident involving a pedestrian, and Mr. X is uninsured. Consequently, he will have to pay compensation to the third-party victim and face a fine and jail sentence. He could have avoided the financial loss & paying the fine if he had purchased a long-term car insurance policy for his new car.

How do long-term insurance policies work?

As the name implies, the long-term best car insurance online has a more extended validity period. According to India's Insurance Regulatory and Development Authority (IRDAI) and the Supreme Court of India, new vehicle owners must purchase long-term insurance policies from September 2018. Three to five years would be the validity period of these insurance policies. The policy is also available to people who bought their vehicles before September 2018 and who opt for long-term policies such as car insurance, bike insurance, etc. As vehicles grow older and depreciate, most owners choose to skip renewals entirely or purchase policies that don't cover all risks.

Long-term car insurance benefits

By reducing the number of uninsured vehicles on the road, long-term auto insurance enhances the chances of settlement of third-party claims. Buying a long-term policy for insurance on a car has the following advantages

1. Long-term car insurance is convenient if you are one of those who forget to renew their policy on time.

You can avoid the hassle of insuring a car policy each year by taking advantage of this policy.

2. When you purchase a long-term auto insurance policy, insurers often offer you discounts on the premiums.

It occurs because these auto insurance policies reduce insurers' administrative and policy issuance costs. Additionally, if you have an anti-theft device installed in your car, you may be eligible for additional discounts on your insurance premium.

3. NCB: A No Claim Bonus is a discount given to the policyholder for not filing a claim during their previous policy period.

You are entitled to a higher NCB with a long-term insurance policy than a standard car insurance policy.

4. Avoid Non-Renewal Risk- If your car needs repairing or replacement after the policy renewal date has passed, you will have to cover the cost out of your pocket.

Do this because the coverage does not extend beyond the policy renewal date. As long-term car insurance policies are due after three years, there is a reduced possibility of forgetting to renew your policy regularly.

5. Time and Energy Savings- A standard or short-term auto insurance policy requires you to submit an examination review of your vehicle when its renewal is due.

An annual motor insurance examination isn't necessary with a long-term policy since this isn't required every year.

6. Changing premiums- IRDAI determines the third-party premiums every year.

see an increase in your multi-year car insurance premium if the IRDAI increases the third-party premium rates.

Your policy will renew after three years, and you cannot change your premium until then.

How to benefit from a long-term policy on car insurance?

It is essential to pay your premiums regularly from a long-term auto insurance policy. You should always purchase long-term auto insurance for your new car, whether new or used. While driving, make sure to keep your vehicle documents such as RC, PUC certificate, and driving licence with you to avoid getting a traffic ticket.

Punishments/ fines for driving a new car without long-term third-party insurance

If you drive a new car without long-term third-party insurance, you will be penalised according to Section 81 of the Motor Vehicles Act, 2019.

  • For a first offence, a fine of Rs.2,000 and imprisonment of up to three months are possible punishments
  • A second offence is punishable by a fine of up to Rs.4,000 or three months' imprisonment

Conclusions

There are several car insurance policy downloads and plans available.

Picking a plan involves weighing various factors such as coverage options, premium rates, and claim benefits. Automobile insurance aims to protect you against damages caused by accidents involving your vehicle, which the insurance company will cover. You can benefit from auto insurance if you are concerned about theft, accidents, and other liabilities. To obtain the benefits associated with a vehicle insurance policy, you must make payments regularly. In every aspect, long-term auto insurance coverage is valid and is the best option for people who forget to renew their policies every year.

Faqs

1. How does the long-term package policy work for cars?

New car and two-wheeler insurance prices will be reduced by the new rule, which will take effect on August 1, 2020. Rather than three to five years of insurance packages, customers will now be required to buy compulsory third-party insurance.

2. Vehicle insurance - why is it necessary?

It keeps you stress-free - You can reduce the stress of driving if you are not a confident driver by getting your car insured. It is necessary to have car insurance even for experienced drivers, as they may get into accidents without their knowledge.

3. Long-term motor insurance: what is it?

Among Long-term Car Insurance in India, Third-party cover protects third parties financially if their vehicles are damaged or destroyed due to a road accident caused by the insured vehicle.

4. Can we get car insurance for five years?

Insuring your third-party vehicles for multiple years has many benefits

For the next three to five years, you will not have to pay your third-party insurance policy premium. You do not need to renew your insurance policy annually because you have paid the premiums in advance.

5. Is it possible to purchase car insurance for longer than a year?

A car owner can purchase a multi-year comprehensive policy that includes third-party (TP) and own-damage (OD) car insurance. One of the advantages of choosing this option is that you can keep track of only one car insurance renewal period.

6. How does the new vehicle insurance rule work?

Due to less affordability and high costs, in July 2018, long-term third-party insurance was made mandatory, but later they estimated this rule. By this rule, four-wheelers have to carry third-party insurance for three years, and two-wheelers have to carry third-party insurance for five years.

7. Is it necessary to have car insurance for many years?

You should purchase a comprehensive insurance policy before buying a new car or a bike that includes a one-year own damage coverage and a three-year mandatory third-party coverage. Third-party insurance premiums are uniform across all insurance companies because the IRDA sets them.

8. When does car insurance expire?

An insurance policy for motor vehicles generally has a one-year validity. It needs to be renewed before the due date before you will not inspect the vehicle. A motor insurance policy expires if it does not renew on time.

9. Three years of insurance is mandatory?

According to the Motor Vehicles Act, 1988, third-party insurance is mandatory for all vehicles. When you purchase a basic third-party bike or scooter insurance policy for your new bike or scooter, you must purchase a policy that covers you for five years.

10. Does our car insurance have to be paid annually?

Insurers may offer a discount of around 7% if you pay in total annually, which is a comfortable option for some.

Others prefer to pay in monthly instalments throughout the year. What you choose depends on what you can afford comfortably; there is no right or wrong choice here.

11. In what ways are car insurance policies different?

Liability, comprehensive, and collision insurance are the three most common types of car insurance. In some states, drivers can still purchase other types of auto insurance coverage, such as uninsured/underinsured motorist coverage.

12. Does comprehensive car insurance have to be purchased?

Having comprehensive insurance on one's car is not compulsory (but recommended); however, having at least third-party coverage is required by this law. There are several reasons to carry car insurance when driving in India, but the Motor Vehicles Act is the most important.

13. How does your insurance work when someone makes a claim?

Even if a person has protected their no-claims bonus, they must pay more for insurance if they have a history of claims because they are more likely to make another claim. Your insurance company will have to recoup the costs of any repairs once you file a claim.

14. What does an insurance assessor look for?

A motor-vehicle assessor evaluates your car's damage before deciding whether to repair it or write it off. The best way to fix the car and how much it will cost will be determined if you can fix it.

15. IDV - what is it?

IDV stands for Insured Declared Value. When your vehicle is stolen or damaged beyond repair, the insurer will pay the maximum amount if it is deemed 'IDV.' Consider buying an insurance policy with a market value of Rs. 8 lakh when you buy your car. The insurance company can only pay a maximum amount of rupees.