Car insurance coverage guarantees protection against personal accident expenses, legal liabilities, and even third-party damages. It also offers security against any natural or manmade disaster. You must always carry a copy of your current motor insurance policy when driving, according to the Motor Vehicles Act of 1988.
You may likely forget to renew your car insurance, but did you know that if it is missing or lapsed, it is considered a crime with severe punishment. The authorities have become more strict in recent years, highlighting the importance of adequate auto insurance coverage.
Read this article to know why you should never let your car insurance lapse.
What Does ‘Car Insurance Lapse’ Mean?
A car insurance lapse is the time frame during which an active policy does not cover your car. In India, the Motor Vehicles Act of 1988 makes auto insurance mandatory. Operating a car without a valid insurance policy is not only against the law but also financially dangerous.
On the other hand, many vehicle owners frequently forget to renew their insurance, letting it expire. There are significant repercussions to allowing your auto insurance to lapse beyond simply paying fines. There are several reasons why this might occur, including:
- Not paying the premiums on your auto insurance
- Allowing your insurance to expire without renewing it
- Changing insurance and allowing time to pass between the end of your old policy and the beginning of your new one
A lapse in auto insurance can be costly, mainly if you are involved in an accident. In addition to paying out-of-pocket for any damages or injuries, you can also be hit with hefty traffic fines. You might also get sued, resulting in financial penalties or lost future earnings. The length of the lapse, the insurance provider, and the insurance regulations in your state all influence the repercussions of a car insurance lapse.
Legal Consequences of Driving Without Insurance
You will face penalties if you are found to be operating a vehicle without valid auto insurance.
- By Indian legislation, there will be a two-month fine and a three-month jail sentence. The previous provision levied a fine of Rs. 1,000 for driving without insurance.
- For the second offence, the legislation may provide a maximum three-month jail sentence and a fine of Rs. 4,000. As a result, there will be a fee for every car without insurance. Many people are caught daily without policies and are heavily fined by the police.
Financial Implications of Letting Your Insurance Lapse
You are liable for all costs if you have an accident while driving with a lapsed insurance policy. This covers the expense of fixing your car and any harm done to other people’s cars or property. You’ll have to pay for these expenses and medical bills out of pocket.
Due to the increased risk that expired policies pose to insurance companies, renewing a policy may result in a higher premium. Inspect your car before continuing your policy and forego the trouble and expense. Extended durations may also result in policy renewal delays.
The Risk of Losing Your No Claim Bonus (NCB)
The NCB in car insurance is a discount insurance providers provide yearly when there are no claims. It lowers your premium expenses. You risk losing your NCB, which translates to higher premiums when you renew your insurance if it lapses for more than ninety-nine days.
To protect or transfer your NCB when switching providers, inform your new insurer about your existing NCB status. Most insurers will allow you to transfer your bonus, but you may need to provide documentation from your previous insurer confirming your NCB entitlement.
Car Theft or Damage Without Insurance Coverage
There may be legal issues if there are third-party damages and no insurance. A lawsuit could be brought against you by the victim of property loss or bodily injury. If you don’t have insurance, you’ll have to pay for compensation and legal costs, which can be expensive.
You need insurance for unpredictable events like heavy monsoon damage, theft and natural calamities. You need comprehensive coverage for your car to avoid the risk of losing protection against unpredictable events.
Difficulty in Getting Insurance After a Lapse
There are limited alternatives for renewing a policy. You might only be able to restore a policy after undergoing extra procedures once it has expired. Certain insurance companies could insist you buy a new policy rather than renew your current one.
There can be waiting periods before the new insurance takes effect, increased premiums, and fewer options for coverage. If the insurance company does not trust you, regain it with safe driving courses and proving safe driving history,
How to Prevent a Car Insurance Lapse?
A car insurance lapse is costly and undesirable. Prevent car insurance from lapsing by implementing these habits:
- Make a Note: Put the renewal date in your calendar or your phone’s reminder system. Remember to watch for reminders that insurance companies send via email or SMS.
- Options for Auto-Renewals: With auto-renewal services, certain insurers immediately deduct the premium from your account. This guarantees the perpetual validity of your coverage.
- Early Reprieves: You can renew your coverage up to 30 days before its expiration date with most insurers. In addition to preventing lapses, renewing early allows you to evaluate several policies and choose the best fit.
- Install Insurance Apps: Many insurance companies offer apps facilitating easy policy renewal and frequent notifications. You can streamline the renewal process by using these apps.
Policyholders must renew their insurance plans on time to prevent a lapse in coverage, considering the significant legal, financial and practical risks involved. Some insurance providers include a grace period during which you can continue the policy even after it expires. It is usually best to renew the policy before its expiration date to avoid issues. Ensure your car insurance is renewed on schedule, preferably before the current policy expires to avoid repercussions.
