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Getting your car insurance renewed soon might be a good idea as driving an uninsured vehicle will attract a huge penalty once the Road Transport and Safety Bill, 2014, is passed.
Owners and drivers of uninsured motorcycles and light motor vehicles will have to cough up Rs 10,000. Those driving an uninsured car or truck will have to pay Rs 75,000. At present, the fine for driving uninsured vehicles it is a meagre Rs 1,000. According to insurance sector estimates, 45 to 50 per cent of two-wheelers on the roads across the nation are uninsured. Experts say it would be wise for such vehicle owners to buy a new two-wheeler as soon as possible, or at least get their lapsed licences, if any, renewed. “It would be wise to even get a lapsed policy renewed because third-party liability is unlimited,” said Vijay Kumar, chief technical officer, motor insurance, Bajaj Allianz General Insurance.
Third-party motor insurance is mandatory under the Indian law and one has to buy the cover at the time of buying a vehicle. He added that third party-liability claim in India has touched a peak of Rs 20-25 crore. The actual payout is Rs 13 crore. While renewing a lapsed policy is easier, it has its own set of disadvantages for all vehicles.
“A lapsed policy means there was a break in insurance coverage. The renewal is treated as a new policy, leading to another inspection of the vehicle. The insurance cover is based on whether the vehicle is roadworthy or not,” said Sanjay Kumar, vice-president and head, motor underwriting, Bharti AXA General Insurance. If the vehicle inspection report comes up with damages or scratches and dents, it will be treated as a pre-existing conditions. “And, post-insurance renewal claims arising due to the pre-existing problems are not paid for,” said Kumar. So, for the same vehicle, the insured declared value would fall drastically due to the policy lapse. Of course, till the new policy comes into effect, usually in seven days, you can’t use the vehicle.
Kumar of Bajaj Allianz General Insurance said if a policy has lapsed for more than 90 days, the customer is usually not allowed to carry forward unused no-claim bonuses (NCBs), if any, from the previous policy. This is a big loss as NCBs can be adjusted against the renewal premium.
Then, insurance companies have a decline list of vehicles. This list could change from time to time, as it is decided based on a the company’s loss ratio in a particular car segment. If your vehicle falls in the decline list, you are most likely to be charged a higher premium for the renewed policy.
These days, it is easier to renew policies as most companies allow renewal online. But a lapsed policy in most cases cannot be renewed online, as it is required to be inspected. However, insurance aggregator PolicyBazaar.com, which has seen a surge in online renewal of two-wheeler policies over the past two months, claims some general insurance companies like HDFC Ergo are allowing online policy renewal even for policies lapsed for over 90 day. Another good idea is to opt for the long-term third-party liability covers — that are for two years — available with private companies these days.
