As a vehicle owner, you have a huge source of relief in the form of a motor insurance policy. This insurance protects you from financial liability arising out of accidental damages, theft, natural calamities or periodic wear and tear.

Whenever some unforeseen incident impacts a car, the first thing that crosses your mind is insurance. However, the sad truth is that most of us forget a very important aspect of motor insurance, which is ‘Renewal’.

Even if you buy the best car insurance available, it serves no purpose if you do not renew your policy before it lapses. It only adds to your financial woes. The additional expenses that you will have to bear from your pocket can be easily avoided had you renewed your policy on time.

If you desire to reap maximum benefits out of your motor insurance policy, you need to take each of its aspect very seriously.

Effects of lapse of a motor insurance policy

Here is a list of consequences that you may have to face if you do not renew your policy on time.

1. Legal Hassles

The law has made it compulsory to have minimal third-party insurance. So, if you are driving your vehicle with an expired insurance policy, you are committing a legal offence. An expired policy means zero insurance and if the traffic officials catch you, you will have to pay high penalties.

To add to this, if your car meets with an accident and there are major damages, you need to face a legal battle, which may push you into a deep financial crisis.

2. No Protection

An insurance policy saves you from all the liability arising out of any damages caused to your vehicle. These damages can arise out of an accident, your vehicle damaging a third-party property or any physical injury due to the accident.

Insurance is a sure-shot way to lighten these financial worries. Once, your motor insurance policy expires, you have zero protection against these huge financial liabilities.

3. Facing Inspection

If you renew your policy after it expires, the officials may visit your home for inspection of the vehicle. This is an important step before issuing the new policy on your name.

To do this, the surveyor will come to your place and carry out the inspection. If the report is found to be acceptable, then a new policy will be issued in your name.

4. Higher Premium

When you opt for a motor insurance renewal, you will be questioned whether your earlier policy has already expired. The insurer does this in order to decide the premium amount.

If you renew your policies on time, you can avail of the benefits of a lower premium amount. However, if you choose to wait until your existing policy expires, you may end up paying a higher premium.

5. No Benefit of No Claim Bonus (NCB)

To reward your safe driving, most of the insurance companies offer an NCB benefit. You are entitled to this benefit only if you have not claimed any loss for the past one year. This NCB discount is offered to you during the policy renewal.

The accumulated NCB discount can be as high as 50% if no claim is made for five consecutive years. However, you may lose out on this benefit of the NCB if you do not renew your policy when required. If your motor insurance has already expired and have not renewed it within 90 days, the complete NCB accumulated over a period of time will lapse.  In case you wish to ask for a claim, you can follow the motor insurance claims process.

Conclusion

It is very important that you take motor insurance renewal seriously. You must understand the financial and legal repercussions that may occur due to the delay in renewal. Hence, always keep a tab on the policy expiration date and make it a point to renew it well before it expires.