Long-Term Third-Party Insurance— Know Why This Is Important

Owning a vehicle, be it a bike or car, gives you a sense of freedom. It helps you travel with comfort without depending on others. Along with that, it allows you to have your way, just as you feel right.

However, a few people misuse this freedom and indulge in punishable practices like overspeeding and drunk driving. Such acts not only put them as well as the other commuters at the risk of facing damages. While law penalizes all wrongful acts by way of fines and challans to deter people from breaking the rules, it also mandates having third-party insurance. Having third-party insurance means that in case you cause any damage to a third-party by accident, then you will compensate them by paying for the damages, while being reimbursed for the same, by the insurer.

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According to the World Health Organization (WHO), India accounts for 10% of road accidents in the world. To reduce the menace of road accidents in India, the government signed the Brasilia Declaration in 2015, wherein it committed to reducing road accidents by 50% by the year 2020. As a step towards this, the Supreme Court in India passed a directive last year, where it asks all insurers to provide long term third-party insurance to motor vehicle owners instead of a policy that needs to be renewed each year.

So far, vehicle owners can buy car or motorcycle insurance in two ways. One option was to buy a standalone third-party cover, or the second one was to go for a comprehensive insurance policy that also covers own damage and add ons, along with third-party cover. However, with the new directive policy, buyers will be offered long term third-party insurance cover.

Long-Term Third-Party Insurance

Why a Long-term Third-Party Cover?

In the year 2015-16, out of 19 crore registered vehicles, only about 8.26 crore vehicles were insured. One major cause behind this huge gap is that many policyholders do not renew their policy annually, owing to which their policy becomes inactive. Such a situation makes vehicle owners uninsured, thus, making them vulnerable to financial liabilities in case of any such unfortunate incident.

Therefore, to address this issue, the supreme court ordered the insurers to offer long-term third-party insurance from thereafter, for both two-wheelers and four-wheelers. This decision was made for all policies that were issued on 1st September 2018 and beyond that. The long-term plan for new two-wheelers must be for five years, and that for new cars is for three years at least.

How Will It Benefit you?

1. Convenience

One of the most crucial benefits that long-term third-party cover offers policyholders is convenience. With such a cover, policyholders will not have to face the hassle to renew their policy every year. This will ensure that once you have purchased a motor vehicle insurance cover, you stay insured for a specific number of years, without the need to renew your coverage again and again.

2. Price Stability

Insurers increase the premium prices each year, based on the changing scenario and conditions. As a result of such changes, policyholders may face price hike every year. However, with a long-term policy, you will remain insulated from such price hikes. This means that you will remain insured at the same price rate for a given period.

3. Reduction in the number of non-insured vehicles

Since a long-term policy helps vehicle owners manage their insurance plan with greater convenience, it is likely to encourage more people to buy a motor vehicle insurance now. This will lead to a reduction in the number of non-insured vehicles, meaning your chances of being compensated also increase in case you face any damages in an accidental crash.

Enjoy Long-Term Motor Vehicle Security

As a vehicle owner, you want to secure your vehicle for as long as you have it. If you find the annual renewal of policy a hassle, then long-term third-party insurance cover is going to help you in just the right way. You can get a long-term third-party cover of three years and five years for your four-wheeler and two-wheeler respectively. This means that when you buy car or motorcycle insurance once, you will secure yourself against third party liability for a longer period, without the stress of renewing it each year.

So, insure your vehicle and enjoy all your rides without any insecurity or fear at the back of your mind.

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