Buying car insurance can often be a bewildering decision. With many different types of plans and the various jargons used in explaining its features makes it confusing to pick the right car insurance policy. For that you first need to familiarise yourself with the meaning of these technical terms to understand these policy terms thoroughly. One such term is the break-in period. This article elaborates on what is break-in period and its importance that you should know when buying your car insurance policy
What is break-in period in car insurance?
The time lag between your last date of policy renewal and the date you actually renew it is known as beak-in period. During this tenure, your motor insurance policy remains inactive and no claims can be made during this period. For instance, your car insurance renewal is due on the 31st March and you renew it on 15th April, this period is known as the break-in period.
What are the consequences of non-renewal during the break-in period?
Not renewing your policy within the break-in period can have legal as well as financial consequences.
- Legal consequence – All vehicle owners are mandatorily required to have a vehicle insurance policy as per the Motor Vehicles Act of 1988. A third-party policy is the basic requirement to legally drive a car in India. Thus, not having a car insurance can attract penalties. Moreover, the legal consequence includes no coverage in the event of an accident damaging third-party property or even injury to a third person.
- Financial effect – The primary aim of a car insurance policy is to prevent financial losses that might result due to liabilities due to others. During an unfortunate accident, having no car insurance coverage can result in financial loss. Further, events like theft or damages to your car are also not covered until your policy is renewed. Therefore, it is often said that a policy during the break-in period is equivalent to having no insurance coverage.
- Impact on NCB – It is not always that you make an insurance claim. For not raising any claims, the insurance companies allow a benefit in the form of no-claim bonus that allows a concession in the policy renewal. Generally, insurance companies allow a period of 90 days up after its expiry to be renewed so that the no-claim benefits can be carried forward to the next policy tenure. Not renewing the policy during this period results in loss of these accrued policy benefits. These benefits are even available if you change to a new insurance company and are not limited to the same insurer.
Considering these above consequences, it is worthwhile to renew your policy well in advance. The first advantage is no lapse in legal compliance followed by a continued insurance coverage for your car. Moreover, the added bonus is the no-claim bonus wherein a concession is allowed atthe time of your car insurance renewal.
Insurance companies send multiple reminders so that you renew your policy in time. This way you can ensure you renew the insurance plan well in advance and not have to miss on these policy benefits. When renewing your car insurance coverage, make sure to assess your current requirement and its impact on the premium. A car insurance premium calculator is a nifty tool that helps to evaluate the coverage and any changes in the premium. 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.
