Why Avoiding Break-In Policy is Essential? Understanding the Risks
A break-in policy means when your policy is set to expire and there is a gap between expiry of old policy and buying a new policy. For example, if your insurance policy is expired on on 12th January and you buy a new policy on 2nd February. Then this gap of 21 days is called a break-in period or break-in policy.
The drawbacks of Break-In Policies
- No Coverage During the Gap: The main drawback is that there is no coverage for your car during the break-in period. You are liable for all related expenses in the event of an accident or damage while the insurance is not in effect.
- Higher Financial Risk: If you don’t have coverage during the break-in time, you may have to pay a large amount of money out of pocket in the event of an unanticipated incident like theft, vandalism, or an accident.
- Potentially Higher Premiums: Insurance companies can consider a period of break-ins to be a coverage lapse. Because insurers may view you as a higher risk, this could result in higher premiums when you renew or transfer plans.
- Why Complicated Claims: Resolving disputes and claims in the event of an incident that happens during the break-in period might be difficult. Insurance companies might not pay for losses or damages sustained during such a period and might even inquire as to why there was a lapse in coverage.
- Administrative Difficulties: Handling policy renewals and making sure there isn’t a break-in period necessitates meticulous preparation and prompt action, which can be laborious and, if not constantly watched, result in unintentional lapses.
- Effect on Coverage History: Your coverage history, which insurers occasionally take into account when setting rates or qualifying for reductions, may be adversely affected by a break-in period.
What happens when insurance is not renewed during break-in time?
In India, break-in time is 90 days in almost every insurance company, but if you exceed this limit you will get no access to the benefits of your insurance policy. Following a re-inspection, your vehicle’s IDV will be determined, and you will have to start over from starting. Any policy purchased beyond the first ninety-day period is considered a brand-new policy, and all accrued discounts and NCBs will be lost.
