Multi-Year Auto Insurance

 An Introduction to Multi-Year Auto Insurance

An automobile insurance coverage must be updated every year, as you may have heard. People typically disregard the need to renew their automobile insurance annually because they find it to be a laborious chore. As a result, they not only violate the law but also significantly increase their financial risk. The Insurance Regulatory and Development Authority of India (IRDAI) made the decision to make multi-year plans required for automobile owners starting on September 1st, 2018 in order to prevent being in this predicament.

A multi-year auto insurance coverage is just what its name implies—it is good for more than one year. The annual renewal of the insurance is not required of the vehicle owner. This implies that a financial cover holds up better over time. Let us first clarify which component of a vehicle insurance coverage is required.

The Required Component

According to The Motor Vehicles Act of 1988, purchasing a vehicle insurance coverage is necessary in India. The new law mandates that every automobile owner get at least a multi-year third-party insurance coverage for his or her vehicle. Existing automobile owners can keep purchasing temporary insurance. Own-damage coverage is optional and not required. Consequently, purchasing a comprehensive auto insurance coverage is not required.

A third-party auto insurance policy, as the name implies, guards the policyholder against financial harm done to a third party. Anyone other than the insured car's owner or its occupants is considered a third party. So, other drivers, pedestrians, hawkers, etc. would all be regarded as third parties. The owner will be responsible for covering any costs incurred without third-party insurance.

Take the case of automobile owner A, who drives a hatchback, and driver B, who drives a sedan, who unintentionally collided. Any damage to driver B's automobile must be paid for by driver A if driver A was determined to be at fault for the collision. It is well known that sedan automobile parts are expensive to fix or replace. Third-party insurance will protect driver A in this situation. Without it, he would be forced to pay the whole price out of his own money.

 

Options for coverage for multi-year plans

1. A long-term, all-encompassing strategy

An automobile owner has the option to purchase both long-term third-party (TP) and long-term own-damage (OD) insurance for the vehicle. If you neglect to renew your auto insurance on time, this is your best course of action. Long-term benefits of purchasing such a comprehensive multi-year coverage include protection from yearly premium increases. However, compared to the following choices, the price of this insurance will be a little bit more.

 

2. Short-term Own Damages and long-term Third Party

The second choice is to get third-party auto insurance for a minimum of three years and one year of own damage coverage. Although your insurance will be less expensive than a long-term comprehensive coverage, it will still be subject to the option of yearly renewal. To continue to be financially covered against harm done to your automobile, you must annually renew the own damage portion of your auto insurance policy.

 

3. Extended Third-Party Protection

Another choice is to get solely long-term third-party insurance and fully forego purchasing the personal damage component. This will be the most cost-effective choice, but keep in mind that any damage to your automobile will not be covered, and you will be responsible for paying all associated costs. Choosing this route can result in you being underinsured even though you have auto insurance.

 

The conclusion

To be on the right side of the law, you must get third-party auto insurance online or through any other offline method. This will assure your financial security. The simplest and most advantageous way to get third-party auto insurance is online, where it is also more affordable than offline options.