Insurance Basics: Everything You Need to Know

3 Reasons To Renew Your Car Insurance On Time

In addition to being a legal requirement, car insurance covers you against any financial losses that may arise due to unforeseen circumstances, such as natural disasters, theft, or accidents. Most policies are only valid for a year, after which you must renew your policy to continue enjoying the coverage. 

Here are three reasons why timely car insurance renewal is vital.

Keeps Your No-claim Bonus Intact

no-claim bonus (NCB) is a reward insurance providers give to safe drivers who make zero claims during a policy year. This reward comes as an insurance discount as you renew your comprehensive car insurance. NCB typically starts at 20%, and you can accumulate it up to 50% if you don't raise any claims for five consecutive years. 

If your car insurance policy exceeds its expiry date and you don't renew it within 90 days, all your hard-earned accumulated NCB might go down the drain. To keep your NCB intact, never default on your car insurance renewal. 

Keep in mind that your NCB can sometimes stay with you even when you switch your insurance providers. But you have to produce a renewal notice from your previous insurer indicating you accumulated a no-claim bonus. 

Avoid Vehicle Re-Inspection

With timely insurance renewal, vehicle inspection won't be necessary. But if you fail to renew your policy after expiry, your insurer may require a re-inspection of your car before they issue another policy in your name. 

Re-inspection helps check your vehicle's current condition. An inspection agent will visit to see your car, inspect it, and then submit an inspection report to the insurer for scrutiny. If your vehicle is in good shape, you will get fresh coverage immediately. Expect higher premiums if your vehicle has pre-existing damage. 

Note that the re-inspection process can take a few days to complete, which means your vehicle will be without coverage for several more days. To avoid all these hassles, be sure to renew your car insurance on time.

Prevent Financial Liability

When your car has an active insurance policy, your provider covers any damages or losses that arise, including the damages your car sustains and those caused to third parties. But if your policy expires and you don't renew it, your insurer can't cover any liabilities that you might experience.

This also applies to the grace period. The 90 days grace period only gives you a window to renew your policy without a premium increase. But sometimes, no coverage will be available during this time. Consequently, you must manage any damages to your car and third-party liabilities out of pocket.  

For more information, contact a local auto insurance provider