Why ULIP mis-selling has become rampant ?

All of us know the importance of having car insurance. It protects us from unnecessary expenses that can arise from uncertainties. If you have a car you must have your vehicle insured with at least a third-party vehicle insurance. According to Indian law, it is mandatory for every car owner. There are some technical terms and jargon related to car insurance. But many people do not have a clear idea about them. A break-in period is one of the most important terms for car insurance. But what does it mean?

A break-in period is the time between the last date for renewal of car insurance and the date on which you actually renew the policy. During this time the motor insurance policy will remain inactive. Naturally, if a vehicle faces any damage during this period, it will not be covered under the policy.

Benefits

Most insurance companies in India provide a grace period of 90 days during which you can renew your car insurance policy. That is the maximum allowed ‘break-in period’ in car insurance. During this period, you are still eligible for benefits like no claim bonus (NCB).

However, once the grace period is gone, you will lose all the accumulated benefits. Your motor insurance policy will lapse.

The break-in period can affect you from a legal as well as a financial security perspective.

Legal effect

The Motor Vehicles Act has made it mandatory for all vehicle owners in India to purchase at least a third-party liability insurance before driving their car. This makes it illegal to drive a car during the break-in period. In that case you can face a monetary penalty and legal hassles.

Financial effect

Basic aim of insurance is to secure oneself against financial losses that might arise due to unforeseen circumstances. According to experts, a break-in period is as good as having no insurance. If a car faces any damage during the break-in period, it will not be covered under the policy.