What is the Significance of Grace Period in Car Insurance?

It is common knowledge that insurance policies are valid for a specified duration. While the periodicity of renewal differs among different policies, it sure needs to be renewed for continued coverage. The same is the case when it comes to a car insurance plan. A car insurance policy is a contract between you, the policyholder, and the insurance company for providing financial coverage. While the contract is valid only for a specified duration, renewal is the only way to keep it active for continued protection. In case of failure to renew it on time, it leads to the expiry of your car insurance cover. Thus, to ensure you do not miss renewing it on time, insurance companies provide a certain additional period to renew the policy, known as the grace period.

Meaning of grace period

Grace period is a specified duration that the insurance company allows, before any accumulated policy benefits lapse. Using the grace period allowed by your insurer, you can continue to avail of car insurance renewal benefits, like the No-Claim Bonus or NCB, even if your policy is renewed after its expiry. However, during such a grace period, no insurance coverage is available for any liabilities or damages to your car. You basically only get some additional duration to renew your insurance cover, but during this time, no protection is available. Any unfortunate accident injuring a third person or causing property damage and other damages to your car due to natural disasters or man-made events shall not be covered during the grace period. Thus, it is essential to make an insurance renewal before the expiry of your policy to enjoy continued coverage. Further, a timely renewal ensures no inspection is required at the renewal date. You can visit the official website of IRDAI for further details. *

What is the duration of such a grace period in car insurance plans?

Generally, the grace period for car insurance plans is between the range of 15 to 30 days, depending on the terms of the insurance contract. However, the IRDAI regulations provide a 90-day grace period to carry forward any accumulated NCB benefits to the subsequent policy tenure. Renewal of your car insurance after the grace period will result in late fees and restoration of premium to its original amount. You can visit the official website of IRDAI for further details. *

Are there any consequences of not renewing the policy on time?

The Motor Vehicles Act of 1988 makes it mandatory for all vehicles registered in the country to have at least a third-party liability insurance plan. In case you do not renew your policy on time, you attract consequences of legal liabilities in case of an accident. In addition, fines shall be imposed if you’re found driving without a valid insurance policy. No insurance cover means no protection for damages, both to your car and the liabilities that may become payable to others. Further, a vehicle inspection will be required to restore the policy coverage in the future. * * Standard T&C Apply Thus, it would be best to ensure a timely policy renewal to avail the NCB benefits, legal compliance, as well as protection for your own vehicle against damages. So, make sure to not put off buying an insurance plan for a later date and renew it in advance. Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms and conditions, please read sales brochure/policy wording carefully before concluding a sale.