What To Do if Your Vehicle Insurance Expires During The Lockdown?

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What To Do if Your Vehicle Insurance Expires During The Lockdown?
Sajja Praveen Chowdary - 01 May 2020

The contagious pandemic Coronavirus (COVID-19) has spread globally and infected more than 2.7 lakh people globally of which almost two lakh people have lost their lives. At the moment, while the count of confirmed COVID-19 cases in India stands at over 30,000, the disease has claimed more than 700 lives in the country. Thus, in an attempt to contain the spread of the virus, Prime Minister Narendra Modi has extended the nationwide lockdown from April 14 to May 3, 2020.

Now, while the lockdown is essential at the moment, it has also created some degree of panic amongst people regarding the normal functioning of everyday activities. One such concern amongst the people is about renewing their vehicle’s insurance, even though almost every vehicle is at stand still due to the movement restrictions imposed by the government.

What Does The Lockdown Extension Imply?

Taking a note of this, the government has decided to extend the validity of the vehicle documents that expire during the lockdown. As per a notification issued by the Ministry of Finance all those compulsory third-party insurance policies are expiring between March 25, 2020, and May 3, 2020 have been further extended till May 15, 2020 due to the coronavirus lockdown. This means that if your current compulsory third-party insurance policy is expiring between March 25, 2020, and May 3, 2020, and you are not able to renew your policy because of the country-wide lockdown, then you may renew it by May 15, 2020. The notification has been issued keeping in mind the interest of the people who are unable to make payment of their renewal premium on time in view of the prevailing situation in the country as a result of COVID-19.

Implications On Motor Vehicle Insurance

It is believed that the step has been taken to ensure the continuity of the statutory motor vehicle third party insurance cover from the date on which the policy falls due for renewal, so that any valid claim triggered during the grace period can be paid. However, it is important to note that the notification is applicable only for third party insurance policies. The notification guidelines do not apply on comprehensive motor insurance policies that include both third-party insurance and Own-damage cover. Most of the policies sold for private cars are comprehensive policies and needs renewal.

However, if they are not renewed before expiry, it may lead to higher premium, loss of No Claim Bonus (NCB) and will also need inspection of the vehicle. Therefore, it is advised that the customers who have third party insurance policies and aren't able to afford the premium in such hard times can postpone but, others should renew on time to ensure they don't undergo further troubles later.

Importance of the Extension

This extension is important because normally these insurance policies cease to be in force if not renewed on the renewal date. The third-party motor insurance lapses if it is not renewed on the due date and the vehicle owner can become liable to pay penalty and third-party damage compensation, both from his own pocket. If you don't renew your third- party insurance on the due date, then the policy expires. If this happens then you can be fined Rs 2000 for driving a vehicle without third party insurance under the Motor Vehicles (Amendment) Act. Worse, in case of damage to a third party -some else's car, property - or death of a third party (person) during the period when the 3rd party insurance is not in force, you would be liable to pay entire compensation on your own. Hence, you must remember to renew the policy on or before the due date.

But what if your vehicle insurance expires during this period?

Well, you won't be the only one for several other citizens in the country are facing a difficulty getting their vehicle insurance renewed. Taking a note of this, the government has decided to extend the validity of the vehicle documents that expire during the lockdown. According to a letter issued by the Ministry of Road Transport and Highways (MoRTH), all the vehicle documents, like registration, driving license, vehicle fitness, etc., that could not be renewed or are likely to not be renewed due to the Coronavirus lockdown, will be considered valid till 30 June, 2020. But this includes only those vehicle-related documents that expire between 1 February to 30 June, 2020.

This decision has been taken by the government to ensure that all the vehicles involved in providing emergency services during the lockdown can continue to do so legally. MoRTH has also allowed state governments to implement 'non-use clause' facility in the case of transport vehicles that are not being used during the lockdown. This facility, already being used by several states, suspends tax liability and can offer relief to taxi, buses, and other commercial vehicles that are non-operational under the current circumstances.

So, in a nutshell, all the motor vehicles related documents' validity will be extended till 30 June, provided that documents expire between February 1, 2020 to June 30, 2020. Now, as for the insurance policy, things are a little complicated. MoRTH's letter doesn't explicitly mention vehicle insurance policy but considering that it is a mandatory vehicle document, it is safe to assume that the extension applies to it as well. But does this mean that people should not renew their motor vehicle insurance policy during the lockdown even if they can by the means of online payment? The experts are of the opinion that it is best to renew insurance policy if possible. This is because so far, there is not a lot of clarity about how the extension works. There is a possibility that renewing insurance after 30 June could lead to a possible survey or inspection by the insurance agency, which is an overhead not everybody enjoys. So, to be on the safer side, we'd suggest that you renew the vehicle insurance policy, if possible.

The Author Is The Head Of Motor Insurance, Policybazaar

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