In this blog, we’ll break down the advantages and drawbacks of both yearly and multi-year policies to help you make an informed decision when purchasing car insurance online.
When it comes to insuring your car, one of the most important decisions is choosing between a yearly car insurance policy and a multi-year car insurance policy. While both options provide essential protection, they offer distinct benefits that cater to varying needs. This choice can impact your overall convenience, budget, and long-term financial planning.
In this blog, we’ll break down the advantages and drawbacks of both yearly and multi-year policies to help you make an informed decision when purchasing car insurance online.
Understanding Yearly Car Insurance
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Yearly car insurance is the traditional form of coverage where the policy lasts for 12 months. After each year, policyholders need to renew their insurance to maintain continuous protection. This type of policy is generally available for both third-party liability and comprehensive car insurance.
Pros of Yearly Car Insurance
- Flexibility: With a yearly policy, you can reassess your insurance needs annually. Whether you want to adjust coverage, add new features, or even switch insurers, there’s plenty of room for change.
- Lower Upfront Cost: Paying annually means you're not tied to a long-term commitment, and it’s easier to manage your finances in the short term.
- Opportunity to Compare: Each renewal offers an opportunity to compare policies, update coverage, and get the best deal for your needs.
Cons of Yearly Car Insurance
- Risk of Policy Lapse: Failing to renew your policy on time can result in it lapsing, leaving your vehicle uninsured and exposing you to potential penalties.
- Annual Price Increases: Premiums for third-party car insurance can increase annually, resulting in higher costs each year.
- Time-Consuming: The renewal process can be repetitive, requiring you to re-evaluate your policy and make adjustments each year.
What is Multi-Year Car Insurance?
Multi-year car insurance policies were introduced to give car owners a longer-term option. The Supreme Court of India mandated that third-party liability coverage for new vehicles must be for a minimum of 3 years. Many insurers now offer comprehensive multi-year plans that bundle third-party and own-damage covers for 3 or 5 years.
Benefits of Multi-Year Car Insurance
- Hassle-Free Renewals: A multi-year policy eliminates the need for yearly renewals, offering peace of mind and continuous protection. You no longer need to worry about missing renewal dates or dealing with paperwork each year.
- Stable Premiums: One of the standout benefits of multi-year policies is the ability to lock in premiums for the entire term. This can help you avoid annual price hikes and provide savings over time.
- Better No-Claim Bonus (NCB) Protection: Unlike yearly policies, where a claim can wipe out your NCB, multi-year policies offer better protection of your NCB, even if a claim is made.
- No Vehicle Inspections: Some insurers may require vehicle inspections annually, particularly for older cars. However, multi-year policies often don’t require these inspections for several years.
- Additional Discounts: Many insurers offer attractive discounts for choosing a multi-year policy. For example, with companies like TATA AIG, customers may receive up to 85% off on new vehicle insurance and 75% off on rollover policies. Additionally, if your car is equipped with an anti-theft device or you’re a member of a recognised automobile association, you may qualify for even further savings.
What Does a Comprehensive Multi-Year Policy Cover?
- Own Damage: Protection from damages caused by accidents, fire, theft, and natural disasters.
- Third-Party Liability: Financial coverage for injuries or property damage caused to third parties by your car.
- Personal Accident Cover: Provides compensation for the owner-driver in case of injury or death, up to ₹15 lakh.
- Add-Ons: Optional features like Zero Depreciation, Return to Invoice, Roadside Assistance, and more for enhanced protection.
With a comprehensive policy, your Toyota Hilux is well-protected, and with car insurance online, you can easily customize it to suit your needs.
Are There Any Limitations to Claims?
While there’s no limit on how many claims you can make, frequent claims can:
- Wipe out your No Claim Bonus: Multiple claims in a year will reduce the bonus you’ve earned.
- Increase your Premiums: Insurers may raise your premiums at renewal if you’ve made frequent claims.
- Limit on Add-Ons: Some add-ons, such as Zero Depreciation, may have limits on the number of claims (typically two per year).
Which One Should You Choose?
Here’s a quick comparison to help you decide between yearly car insurance and multi-year car insurance:
| Criteria | Yearly Policy | Multi-Year Policy |
| Renewal Frequency | Every year | Every 3 or 5 years |
| Premium Stability | Subject to annual price hikes | Locked-in rates for 3-5 years |
| NCB Protection | A single claim resets NCB to 0 | Better NCB retention structure |
| Inspection Requirement | Annual inspections (for older cars) | Usually not required for 3 years |
| Financial Commitment | Lower upfront cost | Higher upfront cost, but better savings |
| Add-On Compatibility | Available for each renewal | Available across the policy duration |
If you're someone who prefers flexibility and doesn’t mind renewing each year, a yearly policy might be right for you. However, if you’re looking for stability, convenience, and long-term cost savings, a multi-year policy offers better value.
Final Thoughts
Choosing between yearly and multi-year car insurance ultimately depends on your driving habits, the length of time you plan to keep the car, and your financial objectives. With online platforms making it easier than ever to compare policies, understand coverage options, and purchase your plan, you’re equipped to make a well-informed decision. For long-term cost savings, continuous protection, and the convenience of not having to renew each year, multi-year car insurance is a practical choice. Be sure to read through the policy terms, check the claims process, and be aware of any exclusions, such as geographical limitations or usage violations.
