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5 key points to consider when renewing a car insurance policy

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Did you forget to renew your car insurance? Well, many policyholders find themselves in that situation more often than not. You must renew car insurance in time to protect yourself from financial risks and a possible face-off with the authority. In India, it is mandatory to have valid insurance to drive your car on the road.

While renewing your car insurance policy, you may stay with your present insurer or switch to a different insurance provider who offers you a better deal and additional advantages.

Either way, the policy must be renewed before the expiration date to keep enjoying uninterrupted benefits. You can avoid major problems and significant financial losses by renewing your insurance before its expiry.

When you renew expired car insurance, keep the following points in mind.

What is car insurance renewal?

Most insurance providers in India offer annual plans. These plans are valid for a year and must be renewed every year. If you fail to renew car insurance on time, your policy will expire and you will lose coverage. Besides initiating the car insurance process from the start, you will not be covered for any losses until you get a new insurance policy.  In the case of a mishap, you will have to bear the losses and repair expenses all alone.

At the time of policy renewal, you can stick with the current insurance provider or select a different one. If you are renewing your insurance with the same insurer, you may do it online as it is easier, time-saving, and involves minimal paperwork.

However, consider these aspects when you renew expired car insurance to ensure you bag the best deal possible.

Things to remember when renewing a car insurance plan

 No Claim Bonus (NCB)

NCB gets you good discounts on the premium amount. NCB is the reward offered by the insurer for not raising a claim during the policy period. It is given to the policyholder in the form of a discount on the policy premium at the time of renewal. When you renew car insurance, you are eligible for reductions for completing claim-free years for up to five consecutive years.

NCB starts at a 20% discount on the completion of the first claim-free year and goes up to 50% on completing five claim-free consecutive years. Since the NCB discount significantly lowers your Own Damage (OD) premium, you must keep a track of it and use it at the time of car insurance renewal.

Remember, the NCB reduction applies to the OD premium only, and not the total price. For example, if your OD premium is Rs 800 and your entire premium is Rs 1,000, your TP premium would be Rs 200, or 20% of the total premium. According to this example, the NCB discount will only be given on the Rs 800 OD charge. If you are unaware of this split, you may feel cheated by your insurance provider.

Add-on features

When you renew car insurance, insurance providers offer a variety of add-on covers to enhance coverage. This allows you to create a comprehensive plan at a reasonable price. Since add-on covers increase your premium cost, choose only relevant covers based on your needs.

For example, you may opt for the engine protection add-on cover if you live in a flood-prone region. Also, some add-on covers such as zero depreciation add-on do not apply to cars older than a certain number of years.

Zero depreciation add-on covers the cost of the car and its parts at market value without considering depreciation. You would know that depreciation rises with vehicle age. Therefore, choosing depreciation coverage for up to five years will lower your out-of-pocket costs.

In addition, get some necessary add-on covers such as 24-hour roadside support and accidental protection, when you renew car insurance. These covers prove quite beneficial in the time of your need.

Voluntary deductible

Consider choosing optional deductibles when you renew expired car insurance coverage. The voluntary deductible is when the insured party offers to pay a specified sum at the time of claim settlement.

The insurer then pays the portion of the claim that exceeds the voluntary deductible. If you are renewing insurance for an old car, then consider choosing optional deductibles as they lower the cost of your car insurance policy.

Insured Declared Value (IDV)

The IDV is the most significant factor in your car insurance coverage as it directly impacts the premium rate. IDV is the highest amount you will get in the event of total loss or theft of your car. Therefore, the IDV you set for your car directly affects your policy’s premium.

The higher the IDV, the higher will be the premium amount, and vice versa. However, it is not advisable to set a lower IDV for your car just to reduce the premium cost. If you do so, then you will have to face bigger losses in the event of the total loss or theft of your car.

A lower IDV than deserving will leave you underinsured. So, when you renew car insurance or purchase a new one, always set the IDV based on the manufacturer’s quoted selling price of the specific vehicle model. In short, set the right IDV. For a car older than five years, the insurer may evaluate the vehicle’s condition.


You can move your policy or switch from one insurer to another at the time of policy renewal. For example, you may want to switch to another insurer because they offer better customer service, a cheaper premium, enhanced protection, or a wider range of add-on covers. You can transfer your accumulated No Claim Bonus to the renewed policy after your insurance plan has been moved to the new insurer.


You must renew your policy on time to avoid losing your hard-earned NCB bonus for car insurance. Since the bonus helps to lower the premium, losing it would result in a higher cost. Renew expired car insurance before expiry to enjoy continuous benefits of the insurance policy.

Today, most insurance providers assist you in managing your policy and alert you when your renewal date is around the corner. So, renew your car insurance on time, add extra covers for further perks, and drive worry-free.

Disclaimer: The above information is for illustrative purposes only. For more details, please refer to the policy wordings and prospectus before concluding the sales.



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