Why Should You Buy a Long-Term Car Insurance Policy?

Unlike a standard 1-year policy, a long-term car insurance policy provides coverage for multiple years. It can be a good option if you want fewer hassles with yearly renewals and protection against potential premium revisions. But is a long-term policy the right option for every car owner? Let's explore this in detail.Read more

Types of Long-Term Car Insurance Policies

1. Bundled Policy (1-year OD + 3-year TP)

   In car insurance, a bundled policy provides 1-year coverage for own damage (OD) and 3-year cover for third party (TP) liabilities. The own damage component expires after 1 year and must be renewed separately to continue coverage, while the third-party cover continues for three years. This is one of the most common insurance options available for newly purchased private cars.

2. 3-year Long-Term Car Policy (LTCP)

   A 3-year long-term car insurance policy provides 3 years of coverage for both own damages and third-party liabilities under a single policy term. Unlike a bundled policy, both OD and TP components in LTCP car insurance remain active for three years. It thus helps reduce your yearly renewal requirements and ensure uninterrupted protection.

Benefits of a Long-term Car Insurance Policy

A long-term car insurance policy helps in reducing the number of uninsured vehicles on the road and thereby, improving the possibilities of third-party claim settlement. Let us understand the advantages associated with buying a long term motor insurance policy-

1. Convenient- If you are one of those people who forget to renew their policy on time, a long-term car insurance policy is the solution for you. This policy helps you to get rid of the hassles involved in the renewal of a car policy annually.
2. Discounts on Premiums- Insurers often offer lucrative discounts on premiums in case of long-term car insurance policies. This happens because these car insurance policies help insurers to reduce their administrative costs and policy issuing costs. Further, you may get additional discounts on your premium if you have an anti-theft device installed in your vehicle.
3. No Claim Bonus (NCB): A No Claim Bonus or NCB is a discount on the car insurance premium given to the policyholder for not raising a claim during the previous policy tenure. With a long-term car insurance policy, you can avail of higher NCB in comparison to a standard car insurance policy.
4. Avoid Risk of Non-Renewal- In case you need to repair or replace your car or its parts after you have surpassed your policy renewal date, you will have to bear the expenses out of your own pocket. This happens because the coverage is not available after the policy expires. With a long-term car insurance policy, there are lesser chances of you forgetting to renew your policy as the renewal will be due after 3 years.
5. Time and Energy Saving- A standard or short-term car insurance policy requires you to submit an examined review of your car's condition during its annual renewal. A long-term motor insurance policy saves the time & effort of having to conduct this examination every year.
6. Changes in Premium- The third-party premium rates are determined by IRDAI every year. If there is an increase in the third-party premium rates by IRDAI, then there will be no effect on your multi-year car insurance premium for three years. This is because your policy renewal will come after 3 years and until then your premium cannot be changed.

You May Also Read: Benefits of Third Party Car Insurance

Annual Vs Long-Term Car Insurance: Which One Should You Choose?

Here are the key differences between long-term car insurance and a standard annual motor policy:

Conclusion

A long-term car insurance policy has proved to be worthy of every penny spent on it. Besides, you don't get a choice to skip buying it for your new car. So, before making a choice, compare quotes from multiple insurers and then choose a policy that best suits your coverage requirements.