Things to know about Multi-Year Motor Insurance Policy

Posted by cholainsurance on January 22nd, 2021

A Multi-Year Motor Insurance Policy plan is insurance coverage that is valid for a period of more than a year. Generally, all insurance policies carry a validity of one year only. It is the responsibility of the policyholder to renew the insurance plan before it expires on the policy anniversary. But seeing how cumbersome the task had become the Government of India, in July 2018 brought out the concept of multi-year policy plans. Now the government has made it mandatory for all motor vehicles to be insured for 3 years. Read on to know the benefit of choosing a multi-year insurance plan over annual insurance plans and the different coverage options available for such plans.

Benefits of Multi-Year Insurance plans-

1. Reduces the hassle

Getting a multi-year insurance plan for sure reduces the hassle of renewing your insurance plan yearly. You don’t have to worry about compiling all the documents required to renew the plan and you can also skip the task of finding an agent or going online to renew the plan.

1. Protection from price hikes

The third-party insurance coverage is prone to price hikes since the premium for such coverage is revised every year. By getting a multi-year insurance plan, your premium is decided on the day you get the plan for three years. Hence, you are protected from such price hikes.

1.  Additional Discounts

To make such multi-year plans attractive most of the insurance companies provide additional discounts to the policyholder. This brings down the overall premium you are liable to pay thus reducing the cost of availing the insurance plan.

1. Transfer your NCB

You can transfer your No Claim Bonus amount to your new car if you happen to sell your old one within the three years. This enables you to avail the discounts on your new car and you don’t have to feel locked in with the car you currently own.

1. Protects you from liabilities that arise from non-renewals

Sometimes you may forget to renew your insurance policy and if you are caught driving a motor vehicle without any insurance or a lapsed insurance then you are liable to pay fines and penalties. You are also at financial risk of spending for damages caused to the vehicle out of your own pockets. To prevent such instances, it is recommended that you go for a multi-year insurance plan.

Types of Multi-Year Insurance plans available

You have three options for the multi-year insurance plans-

Option 1- Buying third-party insurance for three years

Under this plan, you will be protected against damage caused to or from third-party. If you accidentally damage a strangers car or a stranger damages your car, you will not be liable to pay for such damages- your insurance company is. But you are not protected against damages you caused to your vehicle.

Option 2- Buying Comprehensive plan for three years-

Comprehensive plans are plans where you are protected from third-party damages as well as damages caused by other natural factors. This plan is expensive and not recommended by most companies.

Option 3- 1 year Comprehensive Plan along with three-year Third-party Insurance

This plan is a combination of both the plans and is generally recommended for its 360-degree protection and affordability.

Multi-year insurance plan is a boon for all of us. It helps us stay protected most efficiently at a reasonable cost. As with every financial decision, you should ensure that you have read and understood all the terms and conditions of the plan before purchasing it.