Renewing Expired Auto Insurance: A Quick Guide To Follow

Renewing your auto insurance is essential to keeping your policy active and safeguarding yourself from mishaps and legal consequences. Driving without valid auto insurance is illegal in India and can result in fines or even imprisonment. Additionally, an expired policy means you cannot raise claims for incidents that occur after the policy has expired, leaving you vulnerable to financial risks. To renew an expired policy, you may need to undergo a car inspection, especially if your insurance has been expired for more than 90 days, after which you may also lose your No Claim Bonus (NCB) benefits. The renewal process can be done online or offline, with online renewals offering more flexibility, transparency, and lower costs.

Grace period and its consequences

Grace periods for auto insurance vary depending on the insurer and state law, but they typically range from 10 to 30 days. Some sources state that grace periods can be as short as 24 hours or as long as 90 days. During this time, your policy remains active, and you are covered in the event of an accident. However, it's important to make the payment as soon as possible, as driving without insurance can lead to legal penalties and financial risks.

Consequences of Missing a Payment

If you don't pay your premium before the grace period ends, your coverage will lapse, and your policy may be cancelled. Reinstating your policy may not be simple and could result in the following consequences:

• Reinstatement fee: Your insurance company may charge a fee to reinstate your policy.
• Rate increase: Your insurer may charge you a higher rate for the same coverage, as they now consider you a high-risk driver.
• Policy cancellation: Your insurance company is not required to maintain your coverage and may cancel your policy. They must, however, notify you in writing before doing so.
• New coverage: If your current insurer cancels your policy, you'll need to find a new insurance company. You may face higher rates as insurers may view you as high-risk.
• Loss of continuous coverage discount: You won't be eligible for a continuous coverage discount offered by some insurers.
• Repossession: If you're financing your vehicle, your lending company may require you to maintain collision and comprehensive coverage. They may repossess your vehicle if you no longer have insurance.
• Legal penalties: Driving without insurance is illegal in almost every state and can result in fines, license suspension, vehicle impoundment, or even jail time in India.
• Financial risk: If you're in an accident while uninsured, you'll be responsible for all medical expenses and repairs out of pocket.

Legal consequences of driving with expired insurance

Driving without insurance is illegal in most places and can result in a range of legal consequences. The severity of these penalties depends on several factors, including the location, the number of offenses, and whether the incident involves an accident. Here are some common legal consequences of driving with expired insurance:

• Fines and Monetary Penalties: Driving without valid insurance often results in fines and monetary penalties. The amount of the fine varies by location, with penalties ranging from $100 to $5,000 for a first offense. Repeat offenses typically lead to higher fines, with amounts reaching up to $5,000 or more.
• License Suspension: Driving without insurance can result in the suspension of your driver's license for a specified period. The duration of the suspension differs by location and can range from 30 days to one year or more for repeat offenses.
• Vehicle Registration Suspension: In addition to license suspension, the registration of your vehicle may also be suspended until you provide proof of insurance and pay the necessary fees.
• Jail Time: In some cases, driving without insurance can lead to jail time, especially for repeat offenses. The duration of imprisonment can vary, typically ranging from a few days to several months.
• Community Service: Some jurisdictions impose community service requirements for driving without insurance, mandating offenders to perform a certain number of hours of community service.
• Increased Insurance Costs: Allowing your insurance coverage to lapse often results in being classified as a high-risk driver. This classification can lead to significantly higher insurance premiums when you seek to renew your policy or purchase a new one.
• Loss of No-Claim Bonus: In certain cases, if you do not renew your expired insurance within a specified period (often 90 days), you may lose your No-Claim Bonus or No-Claim Discount, resulting in higher premiums during renewal.
• Vehicle Impoundment: In some locations, law enforcement officers have the right to impound your vehicle if you are pulled over without valid insurance. You will then be responsible for towing fees and other associated costs.
• SR-22 or FR-44 Filing: In several states, if you are found driving without insurance or cause an accident while uninsured, you may be required to file an SR-22 or FR-44 form with the state's Department of Motor Vehicles (DMV). This form verifies that you are carrying the required minimum insurance coverage.
• Legal and Financial Liability: If you cause an accident while driving without insurance, you will be held financially responsible for all damages, including vehicle repairs, medical expenses, and legal fees. This can result in significant out-of-pocket costs, potentially leading to financial strain or even bankruptcy.

Loss of 'No Claim Bonus'

No Claim Bonus (NCB) is a reward given by an insurance company to a policyholder for not raising any claim requests during a policy year. It is a discount ranging between 20% to 50% on the premium amount during renewal. The NCB is incremental, so if no claims are made for five consecutive years, the discount can be as high as 50%.

The NCB is important because car owners spend a considerable amount on comprehensive car insurance during the lifetime of the vehicle. As the NCB helps to reduce the premium, it becomes an important feature for the car owner.

The NCB is associated with the car owner and not the car. Therefore, if the owner sells their old (insured) car and buys a new one, they can carry forward the NCB. The NCB also stays with the owner if they switch their insurance provider. However, if the owner does not renew their policy within 90 days of its expiry, they will lose their NCB.

If a claim is made during the policy year, the NCB will be reset to zero. However, some insurance companies offer an NCB Protection Cover add-on, which allows the policyholder to make a claim and still qualify for the renewal discount.

Inspection process

The inspection process is a crucial step in the car insurance renewal journey, especially if your policy has already expired. Here is a detailed guide on what to expect and how to navigate the inspection process smoothly:

Understanding the Need for Inspection:

• If your car insurance policy has expired and you want to renew it, an inspection is usually required, especially if a significant amount of time has passed since the expiry date.
• Inspection is also necessary when switching from a third-party liability plan to a comprehensive car insurance or when opting for add-ons like standalone own-damage cover or zero depreciation cover for the first time.

Types of Inspection:

There are two types of inspections: self-inspection and third-party inspection. Self-inspection allows you to examine your vehicle using your smartphone, while third-party inspection involves an insurance company representative or an authorised agency inspecting your car.

Self-Inspection Process:

• Download the insurance company's mobile app or visit their website to initiate the self-inspection process.
• Provide basic information such as your name, contact number, vehicle details, and policy number.
• Record a 360-degree video of your car, ensuring you capture all angles, including any existing damages. Open the bonnet to record the engine and chassis number.
• Submit the video or photos as per the insurer's requirements.

Third-Party Inspection:

• The insurance company or an authorised agency will schedule an appointment to inspect your vehicle. Ensure your car is accessible and available for inspection.
• An inspector will evaluate your car's condition, including checking for dents, scratches, missing parts, engine leaks, transmission noise, and overall safety.

Factors to Consider:

• Keep your vehicle in a well-lit, open area during inspection, avoiding underground parking garages.
• Review the video or photos before submission to ensure all required angles are captured.
• Ensure a stable internet connection when uploading videos or photos to avoid technical difficulties.

Post-Inspection Steps:

• The insurance company may request a re-inspection if they are not satisfied with the initial inspection.
• Your renewal application may be rejected if certain conditions or requirements are not met.
• Always seek acknowledgement from the insurance company after submitting your inspection report or video.

Benefits of Self-Inspection:

• Self-inspection saves time as you don't have to wait for an inspector to visit your location.
• It is convenient and can be done using your smartphone without the need for specialised tools or skills.
• Self-inspection allows you to perform the inspection at your convenience without meeting an insurance expert.

Steps to renew an expired insurance policy

• Get in touch with your insurance provider as soon as you realise your policy has expired.
• Choose another insurance provider for enhanced cover or renew your existing policy, depending on your requirements.
• Opt for an add-on cover with your car insurance at the time of renewal, if you wish.
• If your policy has expired, the insurer will fix an appointment to get your vehicle surveyed again. Alternatively, you can choose the self-inspection option offered by some insurers online.
• Once the vehicle inspection is successful, you can buy a new insurance policy, which will be issued to you instantly.
• If you are buying online, visit the insurer's website and enter your car number. Your car details will be auto-fetched.
• Select the policy expiry date and whether you have previously made a claim.
• Find the right insurance renewal plan for your car and add any cover you wish to add.
• Enter your previous policy 'No Claim Bonus' discount. You are eligible for NCB if your policy expiry is still within the grace period of 90 days.
• Fill in the required details and proceed with payment.
• After premium verification, make the payment via online modes.
• Once the payment is complete, your insurance renewal policy documents will be sent to your registered email address.

Frequently asked questions