General insurance contracts are usually annual and must be renewed before the policy expires. Individuals usually purchase insurance coverages like health insurance, personal accident coverage, auto insurance, and perhaps household lump sum insurance, etc.
Life insurance policies, on the other hand, are long-term contracts and have installments that must be paid on time.
Supriya Rathi, Full Time Director, Anand Rathi Insurance Brokers, says: “An insurance policy covers the fortuitous event, and you really can’t predict when you would demand the insurance to perform or keep its promise to pay.
She adds: “An aggressive race against his vehicle, a bad fall, a sudden heart attack, a sneaky theft or a freak electrical short circuit causing a fire – each of these events can result in a loss – physical and / or financial. ”
Therefore, it is not only important that one decides to take out insurance, but it is also essential that one continues to renew the same on time without interruption.
For some insurances like Mediclaim and Motor, there are specific coverages and benefits that are lost if the policy is not renewed on time.
The most important reason for timely renewal is risk coverage. There are countless examples of individuals who have missed renewal and find they have a claim situation at hand, who, despite having held insurance until recently, now find themselves uninsured at the date of the incident because they forgot to renew.
“Not only does the date matter, but also the time. For example, if you miss your vehicle insurance, you may need to go through a vehicle inspection process, and from the time of the vehicle inspection, coverage can be granted when the money is received,” says Rathi.
Note that, if an accident between the inspection and the money is sent, the insurance company is not in danger.
Continuity of coverage:
Continuity of health insurance is essential for individuals, as most retail policies have waiting periods ranging from one year to four years for specific illnesses as well as pre-existing conditions.
Rathi explains: “A breach of insurance can certainly create problems here despite the grace period and the insured would have to start the waiting periods again.”
Also, for seniors, if the policy is not renewed, the chances of getting the same insurance plan after a break are slim, as most plans have an age barrier for entry.
In the case of vehicle insurance, it is compulsory for the owner to take out at least Civil Liability insurance. Automobile insurance includes mandatory third party liability coverage. Driving a vehicle (regardless of its type) without this compulsory insurance results in a fine of Rs 2,000 and/or imprisonment of up to 3 months, even for first-time offenders. Thus, an uninsured vehicle can burn a serious hole in an individual’s pocket.
No Claim/Cumulative Bonus:
Similarly, some insurers offer a “cumulative premium” in their policies that significantly increases the sum insured by anywhere from 5 percent to 50 percent upon renewal. Burglary insurance would result in the loss of this benefit.
Some insurance companies also offer this bonus as a direct reduction of the renewal premium. The insured may lose the benefit of the bonus if the renewal is not carried out on time.
Comprehensive car policies also offer a “claims-free bonus” (NCB), which entitles an insured to a significant premium discount at the time of renewal.
Additionally, Rathi says, “As this no-claims bonus follows the fortunes of the insured and is seen as a reward for a good track record, it can be used by an insured person for a new vehicle (which carries a high IEV); and enjoy substantial savings on OD premium.Breaks in insurance may result in the loss of NCB.
Avoid administrative costs:
Needless to mention that for other policies, expiring policies or renewals with breaks can also lead to procedural and administrative hurdles. Apart from that, sometimes there is also an additional cost; as generally, vehicles that have a breach of insurance are subject to inspection before renewal.
This inspection, adds Rathi, “is an additional cost on top of the premium that the insured often has to bear to restart their car insurance. In some medical insurance policy cases, the insured may be required to undergo a medical examination, which involves both time, effort and cost.
“Thus, we can realize that a breach of insurance increases the pain points for the insured in many ways. And this is preventable. It’s more about the mindset and how important insurance is,” Rathi explains. Just take a little more care and the insurance policy will continue to deliver on its promise of peace of mind to its holder.
It is suggested that as soon as you receive a renewal notice from the insurance company, arrange for the early premium payment (after ensuring you make the necessary changes to the required policy) and stay safe.