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A car insurance policy not only insures your car against accidental damages but also against natural calamities such as floods and earthquakes, as well as theft. But every car insurance policy is not valid for a lifetime and requires renewal from time to time. The validity may be regulated by the IRDAI (expanded as the Insurance Regulatory and Development Authority of India) administered by your concerned company.

But do you know why early car insurance renewal is so important? The insurance policy papers are important legal documents that you must carry with you wherever you travel. Even if you possess an electric vehicle, the papers of the electric vehicle insurance are essential to ensure uninterrupted coverage benefits, which calls for a regular renewal.

Let's shed on some other points to make it more clear.

• Avoid Legal Implications

Not possessing car insurance papers or not having renewed or updated policy can bring you under police scrutiny since not having a car insurance policy is a legal offense.

• Payment for Third-party Liability

Most comprehensive insurance policies, even electric vehicle insurance, cover third-party damages. If you are not fully insured by a policy, you have to cover every charge on your own.

• Increases Expenditure

Not possessing an updated or renewed policy makes you liable for payment of every expenditure caused by virtue of your car, such as car repair, third-party damages, theft, etc. It can burn a hole in your pocket quite easily.

• Increased Premium

Whenever you would go for a car insurance renewal, you'd be asked if the insurance policy has expired. If the policy is not renewed even within the grace period, you will be needed to pay a higher premium than usual.

• Losing No Claim Bonus

When you have an active insurance policy, the number of years of unclaimed policy is stacked up in the form of policy renewal discounts and is known as the No Claim Bonus (NCB). The NCB discount can go as high as 50% for an unclaimed streak of five consecutive years. If you do not renew your insurance policy plan within 90 days after the expiration date, this will lead to an NCB reset, causing you to lose the discount benefits.

You can understand the NCB discounts from the following table.

Number of claim free years Percentage of renewal discounts under NCB
After 1 year 20%
After 2 years 25%
After 3 years 35%
After 4 years 45%
After 5 years 50%


Insurance renewal is important, even for an international driving permit which is valid for only a year. You can claim insurance if you have an international driving permit. Even while opting for a vehicle loan in the future, the insurance history may make you eligible for discounts and such offers. All in all, timely car insurance renewal saves you a lot of time, money, and effort.

Disclaimer: The content provided is for education and informational purpose only, none of the information contained in our blog amounts to any form of opinion or advice. Please go through policy related documents carefully or consult an expert before making any insurance-related decisions.


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