The Supreme Court in India along with the Insurance Regulatory and Development Authority of India (IRDAI) laid out fresh norms related to long-term car insurance. As a result, a few of the general insurance companies came up with long-term car insurance policies. Individuals who purchased their vehicles after September 1, 2018, have to mandatorily purchase three-year and five-year third-party liability insurance.

Companies including New India Assurance, Digit, HDFC ERGO, Tata-AIG, ICICI Lombard, and Acko have started offering these insurance covers online to customers. The policies are also offered through web aggregators. Many others are providing these policies through dealer networks during the purchase of a vehicle.

While buying a long-term car insurance policy, always ensure that you compare the premiums, features and other discounts offered. This way, you will be able to land yourself the best available deal, while getting the best long-term insurance policy for your vehicle. Let us understand a little more about long-term car insurance policies and various options available in India.

Additional Reading: What is the best time to buy car insurance?

Understanding Car Insurance

Car Insurance is an agreement under which the insurance provider offers to cover your vehicle for any damage or loss due to an accident which involves the insured car. A car insurance policy aims to provide coverage for theft, accidents, or any other associated liabilities. To avail the benefits offered under a car insurance policy, you must pay the required premium as per the car insurance policy terms regularly.

As per the rules stated under the Motor Vehicle Act, 1988, a third-party car insurance policy which covers third party liabilities, is a prerequisite for owning vehicles in India. Additionally, you can opt for a comprehensive car insurance policy for getting complete protection of your vehicle.

Significance of Car Insurance

Car insurance is a mandate because of some of the key reasons as mentioned below.

• Third-party car insurance policy helps to cover against legal liabilities claimed by the third party in an accident. It also covers damages to third-party vehicles or accident-related injuries to third-party involved in an accident.
• A comprehensive car insurance policy includes coverage for third-party liability and own-vehicle damage cover. The own-vehicle damage cover helps protect against natural calamities, damage to the vehicle due to transit, man made disasters, etc. It also provides personal accident cover to the owner/driver of the vehicle, thereby covering injuries or death caused by accidents.
• Car insurance policies can help in easing any stress to the driver or owner of the vehicle since it offers protection against any damages or losses due to accidents while on roads.
• A car insurance policy is also helpful to the family members and can offer financial assistance in case you suffer a serious injury or disability by way of accidents associated with the vehicle.
• Discounts and offers such as No Claim Bonus (NCB) can be expected along with car insurance policy. This will help in getting a discount on the car insurance premium in case no claims are made during a policy year.

Additional Reading: What Is Vehicle Insurance

Types of Long-Term Car Insurance Policies

According to the Supreme Court orders, you can choose from any of the below-mentioned options under a long-term car insurance policy:

1. Long-Term Third-Party Only Cover: You can buy only a third party insurance policy for three years which is compulsory without an OD coverage.
2. Long-Term Comprehensive Cover: You can purchase a comprehensive plan for 3 years, along with a compulsory third party cover for the same period.
3. 1 Year Comprehensive Cover: You can purchase a comprehensive car insurance policy for 1 year along with a third party liability policy for 3 years. This is often the preferred choice for most car owners.

Benefits of Long-Term Car Insurance

To reduce the number of non-insured cars and accidents on the roads, the Supreme Court of India has made it mandatory for all vehicles which were bought on or after 1st September 2019 to be covered by long term insurance policy. For car owners, the long-term third-party car insurance policy comes with a tenure of 3 years.

Some of the key benefits that can be expected from long-term car insurance policies are:

• Convenience - A long term car insurance policy helps avoid the hassle of getting your car insurance regularly renewed. Sometimes, it may be difficult to keep track of the exact policy renewal dates. This could lead to an absence of coverage and may pose several risks while using the car. Hence, a long-term car insurance policy can offer maximum convenience.
• Easy Renewal – In case your car insurance policy is due for renewal, many insurance providers may opt for an inspection of the car during the process. However, with a long-term car insurance policy, there is no need to undergo any such inspection.
• Multiple Discounts - There are many discounts offered by insurance providers when it comes to long-term car insurance policies. Costs such as policy-issuance and administrative costs can be substantially reduced and these savings can be passed on to the policyholders. These generally come in the form of offers and discounts.
• No non-renewal risks - There are many risks attached to non-renewal of car insurance policies, like any repair work or replacement which needs to be paid for. If you do not renew your car insurance policy on time, you may have to bear these expenses. However, with a long-term car insurance policy, you don’t have to worry about such costs and renewals for at least 3 years.
• No Changes in Premium - If the premium amount of the third-party car insurance policy increases annually, it may be heavy on your pocket. With a long-term car insurance policy, you don’t have to worry about any increase in premium rates for 3 years.
• Upfront NCB - One of the biggest drawbacks of NCB (No Claim Bonus) is not available. When it comes to short-term policies, car insurers offer NCB discount at the time of annual renewal. When you opt for long-term policies, you miss out on the cumulative NCB discounts. To offset this, several car insurers are offering upfront NCB discounts to policyholders at the time of initial purchase itself. 

Conclusion

Having a long-term motor insurance policy is essential for using any vehicle on Indian roads. While buying one, always ensure to go through the various types of motor insurance plans available and choose a policy which best fits your requirement. Also, ensure to go through the terms and exhaustive coverage offered under the policy. This will help you in avoiding any financial loss and get appropriate compensation from the vehicle insurance policy.