The law in our country mandates all vehicle owners to buy insurance to legally drive the car. However, it is equally important to renew car insurance on time. Failing to renew your insurance on time can have far greater impacts on you and your car. If due to some unforeseen reasons, you have been unable to renew your car insurance policy, here is all that you need to know.
What is a lapsed car insurance policy?
When you purchase a car insurance policy, it is valid for a predetermined amount of time. Though the usual term is for one year, you can now buy policies for the long term as well. And should you fail to renew the policy before the completion of the term, the policy will get lapsed. And there are a lot of consequences waiting for you. Thus, you must avoid delaying the renewal of the policy.
What are the consequences of a lapsed policy?
If you fail to renew car insurance by its due date, here are some of the consequences that you might face.
- All the previous benefits of the policy are more likely to be wiped out and it might even result in a higher policy premium.
- There is a possibility of losing out on the no-claim bonus if you have accumulated any in the last few years.
- In the unfortunate event of an accident, the liability of paying for the damages is entirely on you—both for your vehicle as well as any other parties involved in the accident.
- You might end up paying a fine on the number of days that you have missed out on paying the premium for the policy.
- If your policy lapses, insurance manufacturers will most probably ask for an inspection of the car before providing the policy again. If it is a physical inspection, it can take a while. Some insurance companies allow you to record a video of the car and upload it.
- A lapsed policy means a hefty penalty by the traffic police department. The penalty for driving without valid insurance is about Rs. 2,000.
- If there are any legal issues that arise out of an accident, you are liable to take care of them.
Categories of lapsed policies
Following are the three different categories of policy lapses and the actions that you might have to take accordingly.
- Renewal immediately after expiry
Though insurance providers send repeated notifications about policy renewal, it is possible to miss them amidst other emails and SMS. If you are in a similar situation and have identified that your policy has just expired, renewing the policy is fairly easy. There aren’t too many consequences if you renew it immediately. It is important not to drive your car during the duration of the expired policy. You will be liable to pay for any incidents or injuries.
- Renewal after the grace period
Most insurance companies offer a grace period. The grace period of a car insurance policy usually ranges between 30 and 90 days. If your policy is still in the grace period, it is possible to renew car insurance without any hassles. You might not face the consequences, such as a higher policy premium. Another benefit of renewing your policy in the grace period is that you will not lose out on the no-claim bonus discount. However, it is not advisable to drive your car during this period.
- Renewal after the grace period
This is the most extreme case, where you have not renewed your policy and it has crossed the grace period of 90 days as well. In such cases, you will not only lose out on any no-claim bonus that you might have accumulated but also end up needing a car inspection. In other words, these can result in increasing the premium of your policy. And all the while, you are exposed to the financial risks of driving without a policy. Not to forget, a hefty penalty for driving without valid insurance. In the event of an accident, if there are any legal consequences, you are liable for them as well.
How to renew a lapsed policy?
There can be quite a few reasons why one can forget to renew the insurance on time. It could be due to medical issues, a lot of stress and workload, or merely negligence. Irrespective of what the reason might be, the first step is to get in touch with your car insurance provider. In most cases, the insurance provider might ask you to buy a new policy.
However, if there hasn’t been a huge gap, you can renew expired car insurance. If you end up buying a new policy, you will have to undergo the entire process of buying a new policy. And more importantly, if your policy has lapsed, the insurance company will not provide any coverage.
Here are the steps that you must follow to renew car insurance that has expired.
- Visit the website of an insurance provider.
- Verify if your car needs an inspection or not.
- If no inspection is needed, you can decide if you want to continue with a similar plan or choose a new plan.
- Choose add-ons for the plan and verify all the details of the car.
- Proceed with the payment of policy premiums.
Depending on the insurance provider, your car might need an inspection. In such a case, you can either upload a video of the car or the insurance provider will schedule a physical inspection of the car.
You can renew expired car insurance online, as it offers a host of benefits. Here are some of them.
- Buying online will save you a lot of time.
- The process is fairly easy unless there is a need for a car inspection.
- The cost of buying the policy is relatively lower than in offline mode.
- You can renew the policy at any time and from anywhere, giving you a lot of liberty.
- Also, buying a policy online usually requires minimal documents.
- The process is almost instantaneous, and you will receive the policy within a few minutes in your mailbox.
- The entire process, including the payment, is secure, confidential, and quite fast.
Driving around with an expired policy is not ideal. It can lead to financial catastrophe if there is any serious accident. However, if, due to some unavoidable reason, you have not been able to renew the policy on time, you can use the above information to renew car insurance. To avoid any confusion and loss of benefits of a policy, it is recommended to always renew a policy before it expires. It will keep you away from penalties as well.
Disclaimer: The above information is for illustrative purposes only. For more details, please refer to the policy wordings and prospectus before concluding the sales.
Based in New York, Stephen Freeman is a Senior Editor at Trending Insurance News. Previously he has worked for Forbes and The Huffington Post. Steven is a graduate of Risk Management at the University of New York.