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5 Benefits of a Long-term Car Insurance Policy

By Juhi Walia
09 September 2022, 12:57 PM

A long-term car insurance policy provides extensive cover against third-party claims and also includes a comprehensive car insurance cover against damage, theft, injury or death caused to the owner or driver in case of an accident. A long-term four-wheeler insurance offers a validity of three years. Because of its multiple-year coverage, it is also known as a multi-year car insurance policy. 

When you compare car insurance, you will realise long-term car insurance coupled with add-on benefits becomes the best option for all-around financial protection over standard one-year plans.

Moreover, in 2018, the Supreme Court of India mandated all new motor insurance policies to cover third-party car insurance for three years to curb the number of uninsured vehicles on the roads. Therefore, it is advised to buy long-term car insurance instead of purchasing one year at a time.

Features of a Long-term Car Insurance Policy

Below are some important features of long-term car insurance that will help you understand its benefits—

Damage Protection

One of the most important features of car insurance is the protection against damage or loss of a vehicle. The car insurance policy helps compensate for loss or damage incurred to your car or its accessories. However, conditions may apply, depending upon the depreciation of parts mentioned in the policy.

Remember, there are exceptions to every policy, including damage or loss caused outside the geographical area or any damage incurred due to invasion, nuclear activities, or even war.

Third-party Car Insurance Liability Cover

Your car's liability is covered in case of any loss or damage caused by your vehicle to a third party.

Personal Accident Coverage

With long-term car insurance, you can also avail compensation for a personal accident of the owner or driver of the car. This includes injuries or the death of the driver or the owner due to accidents.

Car insurance provides a safety net for your family and financial support in case of some serious injury or disability caused due to accidents on roads. However, there is usually an upper limit for personal accident cover. 

Add-on Benefits

A long-term car insurance policy allows you to choose from add-on covers. Some may include zero depreciation car insurance, lock and key replacement, return to invoice, etc. 

Benefits of Long-term Car Insurance Policy

Now that you know the features of a long-term car insurance policy, let's look at some benefits you can take advantage of. 

1. No Hassle of Yearly Renewals

With a new car insurance policy for the long term, you are entitled to the many benefits of car insurance coverage for a minimum of three years. You don’t have to worry about yearly renewals.

Given the busy schedules of our everyday routine, remembering the annual dates of car insurance policy renewal becomes bothersome.

Sometimes, it may happen that the date of renewal lapses, and with that, you cannot car insurance claim and even lose discounts earned over the years.

As claims won't be available, you may risk spending on repairs or the replacement of car parts.

A long-term car insurance policy is the best solution to avoid such an ordeal.

2. No Worry About Price Hikes

The government usually revises the premium third-party car insurance price every year. However, if you have a long-term car insurance policy, the annual increase in the premium won’t affect you.

This is because, with a long-term car insurance policy, your premium stays the same for the policy tenure of three years. So, you ultimately lock in on a fixed premium when you buy long-term car insurance. 

Long-term car insurance saves you 20-40% on annual renewals for a third-party cover.

3. Benefit of Discounts

Long-term car insurance may get expensive; therefore, several insurance providers offer lucrative discounts, lowering your car insurance premium. The low car insurance price is possible because car insurance companies reduce the costs of policy issuance and other administrative expenses.

You are even entitled to additional discounts and can claim a reduced premium if you opt for an anti-theft device for your car if you are a special needs driver or a member of a recognised automobile association.

4. A Higher NCB

No-Claim Bonus or NCB is a discount offered on car insurance premiums for not raising a claim during the previous year. You can reap the benefits of a higher NCB in car insurance if you sell or purchase a new car during the policy term. However, the maximum discount offered is limited to 50% - the same as in an annual policy.

5. Minimal Compliance

The scope for policy lapse remains greater in an annual policy. If the policy does lapse, the insurer will ask for a fresh vehicle inspection as and when you look to insure your car. However, when you buy car insurance for the long term, you can stay free from such obligations.

Closing Comments

You can choose from a variety of plans and car insurance policies. However, before you zero in on one, you may want to consider some important aspects such as the premium rates, claim benefits, coverage offers, etc. If you are working and have a busy schedule, long-term car insurance is the best plan for you in all aspects. But do thorough research before you make the purchase.

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1. Is long-term car insurance mandatory in India?

As per the Motor Vehicles Act, 1988, a car insurance policy is compulsory for any motor vehicle on Indian roads. The least you need to have is a third-party liability insurance cover.

2. What are the benefits of long-term car insurance?

With long-term car insurance:

  • Your premium stays the same for a minimum of three years.
  • You save money on administrative and policy-issuing costs.
  • The NCB structure of long-term car insurance is better than standard one-year plans.
  • You face no risks of non-renewals.

3. What is the tenure of long-term car insurance?

You can buy long-term car insurance for three or five years.

4. What is the difference between standard and long-term car insurance?

Standard insurance policies are valid for one year from the date of issue and need to be renewed every year. You don’t need to renew long-term policies every year, and your premium stays the same for the period of insurance, i.e., three years.

5. Can I renew long-term car insurance online?

Yes, you can renew car insurance online. You will need to enter your policy details such as existing policy number, coverage, etc.

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