Under the Motor Vehicles Act, the government of India has mandated a car insurance policy for any four-wheeler driven on the roads. Without valid third-party insurance coverage, you cannot legally drive your car in India. The increased challan amount after the modification to the Act in 2019 makes it more crucial to meet the legal requirement to avoid hefty traffic penalties, especially in the case of an accident.
Fortunately, when you buy a new car, you acquire an insurance plan, and the on-road price already includes the premium. However, it is important to renew your insurance policy before expiration to continue enjoying the benefits.
Not getting your car insured or not renewing it on time can invite trouble, not just when it comes to routine traffic stops, but the penalties can get a lot more severe in the case of accidents when driving without the mandatory car insurance policy. In this post, let us discuss the consequences of driving a car without insurance in India.
What are the Benefits of Car Insurance?
Insuring your car not only helps you comply with the legal requirement for driving in India but also secures you and your vehicle against unforeseen incidents.
It provides financial protection if your car is damaged by an accident or other natural or man-made calamity.
You can drive peacefully, knowing that you can claim the expense of repair and loss in any such event.
Third party car insurance is not only compulsory for driving a car on Indian roads but is also quite beneficial as it covers any legal and financial liabilities arising from damage or injury caused to a third-party person or property.
Own Damage Cover
Standalone own damage car insurance protects you financially against any damage caused to the car due to road accidents, fire, theft, or natural calamities like an earthquake or flood. This policy even covers the total loss of your vehicle and compensates you equivalent to the IDV of your car.
Personal Accident Cover
The Personal accident cover is mandatory for every vehicle owner in India. It covers the cost of medical treatment of the driver in case of any injury caused due to a car accident. It also compensates family members if the driver dies in the accident.
Consequences of Driving Without Car Insurance
Let us talk about the major consequences of driving a car without an insurance policy in India.
The law requires you to have a third-party insurance policy to drive on Indian roads. If you don’t buy insurance or renew it before expiry, you are breaking the law and can attract a penalty. When traffic police catch you driving without a valid insurance policy, they can impose hefty fines and punishment.
As a legal proceeding, you are asked to surrender your driving licence, and the car’s registration is suspended. You must pay a penalty of INR 2000 and/or bear imprisonment of 3 months as a punishment for driving without insurance. For any subsequent offence, you must deal with a bigger penalty of INR 4000.
If your car is not insured with a third-party liability policy and gets involved in an accident, you have to face a legal issue. In such a situation, two cases are filed against you – a criminal case for negligent driving and a case for compensating the third party for damage, injury, or death. This type of legal situation can not only shatter you financially but also cause a lot of mental stress.
Driving without car insurance can put you in trouble, whereby you waste a lot of time tackling the legal issue and pay a fine to get rid of liabilities. If any damage is caused to anybody or anyone’s property, you are responsible for the loss.
You may also have to bear the medical cost for any injury to other people surrounding the accident. If anybody dies in an accident, you need to compensate the family; this can put you under a huge financial burden.
Apart from paying losses to a third party, you may have to bear the cost of repairing your own car. In absence of a comprehensive insurance policy, you pay money for repairs, replacement, or total loss from your pocket. Looking at the high costs of repairs, it is easy to say that driving without car insurance can bring a great financial strain on you.
Given how critical a car is for Indian households and the uncertainty that abounds when driving on Indian roads, having a comprehensive cover for such an important asset is an absolute no-brainer.
No Claim Bonus Loss
If your car insurance expires and you haven’t renewed it on time, you lose the No Claim Bonus in car insurance accumulated during the policy term. Not filing any claim during a policy period entitles you to a discounted premium for the next tenure.
The discount keeps increasing each year, saving you on your premium. A lapsed insurance policy results in the loss of NCB, and you end up paying a higher premium whenever you renew the insurance.
Different insurers have different approaches in this regard, and some might provide additional leeway regarding the NCB if the policy expiration remains within the stipulated limit. So you must make sure to check your policy terms regarding the same.
Driving without valid car insurance on Indian roads has several consequences that can be detrimental to the long-term financial well-being of individuals. Given how simple the entire process is, with the initial premiums already included within the on-road prices and numerous online marketplaces and comparison sites such as Paytm Insurance for yearly renewals, there is absolutely no reason to be driving without valid insurance.
Of course, several other add-ons and customisations can be considered, for additional value, and protection against losses, with just minor increments to the basic premium. For the discerning buyer, such add-ons represent great value that can provide long-term returns.
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