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What Happens If My Car Insurance Policy Lapses?

Posted by Royal Sundaram on 06 Feb 2020

It is not uncommon for many of us to miss out on paying necessary utility bills. There may be numerous reasons, such as hectic personal or professional life, medical emergency, travelling, etc. However, it is also a known fact that some people intentionally miss out on paying the car insurance renewal amount just to save the premium amount for a few months. What they don’t understand is that there can be serious repercussions of not renewing the policy on time. In the below read, we will understand in detail about what happens if the car insurance policy lapses. Read on!

 

What is an Expired Car insurance Policy?

 

In India, every car owner is obligated to avail a car insurance policy. Failure in doing so is subjected to penalty by law. A basic car insurance policy is valid for a period of one year. After that, it is to be renewed again. The renewal needs to be completed by its due date, as stated in the car insurance policy documents. If you fail to renew the policy by its last date, the insurance policy is considered lapsed.

 

After the expiration of the policy, the insurance provider will not approve any claim submission. If the accident occurs after the policy has lapsed, the insurance provider will not provide any compensation.

 

After-effects of a Lapsed Car Insurance Policy:

 

  • There are chances of renewal rejection during the insurance lapse period.
  • If the renewal is allowed during the lapse period, you may be subjected to fines or penalties.
  • There may arise a need for you to apply for a new car insurance policy.
  • If you are applying for a new policy, the insurance provider will have to follow the entire formal procedure, including car survey as well as inspection.
  • The premium for a new policy may be higher.
  • There are also chances that you may lose the accumulated NCB (No claim bonus) in case your policy has lapsed.
  • As stated earlier, it is mandatory by law for car owners to avail an insurance policy. You may have to face legal trouble for driving a car without a valid insurance policy.
  • In case there is an accident during the lapse period, it may cause a huge dent in your financial savings.

 

Thus, it is crucial to have a valid car insurance plan in order to be financially safe.

 

Car Insurance Policy Lapse – What is the Next Step?

 

If the grace period is over, you need to apply for a new car insurance policy immediately. Check different policies for the features they offer. Compare the premium cost and pick the one that best suits your budget. Once you have finalised the policy, the insurance provider will conduct a survey or inspection of your car to check for any pre-existing damages.

 

Based on the survey report, your insurance provider will decide if you are still eligible to claim NCB (No claim bonus).

 

How to avoid policy lapse?

 

To avoid car insurance policy lapse and after-effects of the same, the best is to renew the policy before it reaches the expiration date. These days, renewing a car insurance policy is a simple process. You can visit the official website of your insurance provider, enter necessary information such as registration number and contact details, make the payment and you are done. You can also renew the policy with the help of an agent. However, online renewal is not only time saving but also saves the cost that is otherwise paid to the agent.

 

To avoid policy lapse, you can set reminders on your phones or calendars. Some insurance providers may also send alerts when the last date is approaching.

 

FAQs

  1. What is considered a lapse in car insurance?

If the policy has reached its expiration date and you failed to renew it, the car insurance policy will be considered as lapsed.

  1. How do you avoid insurance lapse?

Renew car insurance policy online in a few simple steps and before it reaches the expiry date to avoid insurance lapse.

  1. How much does a lapse in insurance cost?

In case there is a car accident, and your policy has lapsed, you will have to bear the entire cost of repairs by yourself. Also, you will have to pay an additional premium for renewing a lapsed insurance policy.

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