Purchasing a comprehensive three-year insurance policy for a car can lead to significant savings on premiums, especially in case of a new electric vehicle (EV). Unlike an internal combustion engine, the insurance premium for an EV increases as the car ages.

Car owners benefit from lower costs by choosing a three-year policy rather than purchasing the own damage cover separately each year. The savings can be up to 35% in case of an internal combustion engine and up to 45% in case of an EV, basis the type of insurer and the car model.

Comprehensive cover

It is mandatory to buy a three-year third-party cover at the time of buying a new car. So, buying a long-term comprehensive cover that includes own damage and add-ons such as zero depreciation can help customers secure the same price for three consecutive years. This premium will not change in the policy period, even if multiple claims are made or if the government revises the rates of the third-party cover.

Typically, the renewal premium tends to increase after a claim is filed in the first year.
Paras Pasricha, business head, Motor Insurance, Policybazaar. com, says customers do not have to worry about renewing the policy every year, and their no-claim bonus stays protected for the entire three-year period. “They are also shielded from any future increases in third-party premium rates during this time duration,” he says.

Beneficial for EVs

With EVs still relatively new in India, a long-term insurance cover offers peace of mind, especially against damages. Many insurers are now customising EV policies, and opting for a three-year plan can help lock in benefits and ensure broader coverage without having to revisit terms every year.

Subhasish Mazumder, head, Motor Distribution, Bajaj Allianz General Insurance, says this is primarily because the battery, which is a significant cost component of the car, degrades over time.  “As the vehicle ages, the insurance premiums tend to increase. So, opting for a long-term policy for EVs can be a more sensible choice.”

In an EV, the battery accounts for a significant 60% of the total cost. It is the most financially sensitive component. Any damage from water ingress or accidents can lead to extremely high repair and replacement costs.

Safety net

Before buying a long-term car insurance policy, ensure that the policy offers the right balance of comprehensive coverage and useful add-ons like zero depreciation, roadside assistance, engine protection cover, etc. Krunal Vora, head, Motors

Insurance, Probus, says one must check if the insurer offers easy claim settlement and be sure about the policy coverage and exclusions, especially in own damage and battery-related cases for electric vehicles. “One should also check the Insured Declared Value and how it will be depreciated over time,” he says.

When considering purchasing an insurance policy, choosing a company with a very high solvency margin is essential. “Since the customer is committing to a three-year contract, he should look for an insurance provider with a strong claim settlement ratio, a low grievance ratio, and a very high solvency rating,” says Mazumder.

The car owner must ensure that the no-claim bonus is correctly updated in the policy as it is locked in. This means that he will not lose the bonus for minor claims or policy lapses during that period, which acts as an added advantage.