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Short-term vs Long-term Motor Insurance?

Motor insurance is available in many types these days. Apart from the basic covers of third party and comprehensive, you also get options in other areas such as the policy tenure. There is short term motor insurance and long term motor insurance. These days, many people prefer to go to the long term motor insurance policy because of the many benefits it offers. Take a look at this article to know the differences between the various types of vehicle insurance covers and to understand which policy is best suited for you.

What is Vehicle Insurance?

Vehicle insurance is nothing but an agreement between the insurer and the policyholder. The latter pays a regular premium. In return for that, the former promises to protect the vehicle against damages such as bumps, dents, thefts and fire losses. There are two types of vehicle insurance plans available in India, namely the third party plans and the comprehensive plans. What is the difference between comprehensive and third party bike insurance and car insurance? Let us understand the covers in detail to get the answer:

 Third Party

The third party plans are basic vehicle insurance covers. The government has made it compulsory for all vehicle owners to have the third party liability insurance covers in India. If you damage a third party’s vehicle or property, the insurance provider will compensate the third party on your behalf. Also, a personal accident cover is available under such a plan. It is an inexpensive form of motor insurance.

Comprehensive

The comprehensive plans offer third party covers and along with that, also cover your vehicle. If your car or bike gets damaged in an accident, you can claim and get compensated for the losses. Also, if your car or bike is stolen or damaged completely in a fire, you can get a claim for the amount and replace your entire vehicle with it. Next, you have the option of adding riders to your comprehensive motor insurance policy. The comprehensive plans, therefore, offer a wholesome vehicle insurance cover.

The two types of motor insurance plans apply to two wheelers as well as four wheelers. In a comparison of comprehensive vs third party bike insurance, we often see that people opt for a third party plan when they have a basic or used bike that they wish to sell soon. If however, they have a new and expensive bike, they opt for the comprehensive plans. The same holds true for the four  wheeler insurance plans as well.

What are the Different Policy Periods?

As stated, you get short term motor insurance and long term motor insurance plans these days. Here’s a lowdown on each

  • Short term motor insurance

The short term vehicle insurance plans are the regular covers that are purchased for a duration of a single year. You need to renew the plan at the end of the policy period. All the covers expire as soon as the duration of the year is over and renewal is required. The short term option is available in the third party plans and also in the comprehensive vehicle insurance plans.

  • Long term motor insurance

Long term motor insurance plans are covers that stay active for a duration of two or three years. You pay the motor insurance premium upfront when buying the policy and then the plan covers your vehicle for the stipulated time period. You need not renew the plan in between or worry about lapses. This is a very handy option for people who do not intend to sell or change their vehicles any time soon. You can get long term plans for your bike and your car too.

As you can see, there are many ways in which the two types of motor insurance differ. Choose your plan wisely to get the best protection that would be appropriate for your needs.

Advantages of long Term Motor Insurance

  • Cheaper
  • No hassles of Renewing
  • No fear of Policy Lapse

Cheaper

The long term motor insurance plans prove to be economical options. This is because the premium gets locked in when you buy the policy. The duration of the policy may be for three years, but the premium stays fixed at the rate of the year you buy it. In short term plans, the premium increases each year. This is why you make a huge profit when you opt for a long term plan for your motor insurance cover.

No hassles of Renewing

A short term plan of one year needs to be renewed on an annual basis. This can be a hassle at times. But when you buy a long term plan, you can forget about the issues of renewing as the policy only needs to be renewed once in three years.

No Fear of Policy Lapse

Failure to renew the plan on time could lead to your motor insurance cover lapsing. This is a very dangerous thing to happen. When you get a long term plan, such issues are sidelined, as you already pay the premium and keep the policy active for a long tenure of three years without worrying about any lapses in the cover.

Keeping the points mentioned above in mind, you can very well understand just how beneficial a long term motor insurance policy is.

To Sum it up

A motor insurance policy is very easy to get. However, to ensure you have the best and the most valuable plan, you need to first make an analysis of your own needs. Then, compare the plans to see which one is best suited for you. Whether you choose a comprehensive cover or a third party cover, whether you choose a short period motor insurance or you go for long term motor insurance, the plan you have should cover all the needs and be economical for you too. The long term plans have many advantages so you could definitely consider getting such a cover.

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