Difference Between Long-Term and Short-Term Car Insurance Policy

Nothing is more beneficial for car drivers than purchasing a comprehensive car insurance policy. Not having one can be considered extremely risky and is analogous to dangling off the edge of a dangerous cliff with just one hand. Taking protective measures against the uncertainties of the future is a wise decision that is based upon careful calculations. It’s essential that you’re protected from all angles before hitting the road. Car insurance policies are designed to provide maximum protection to drivers and offers them relief during difficult times. These are a handful of reasons why you ought to be covered by a well-crafted car insurance policy.

However, selecting the best car insurance plan can be cumbersome due to a plethora of options available today. Making the right selection is necessary to avail the maximum benefits from your car insurance plan. There are many distinctive policies available that can often lead to confusion during the buying process. Therefore, the different varieties of car insurance need to be clarified before proceeding any further. Generally speaking, your car insurance will come in two variants viz. short-term car insurance and long-term car insurance. Let’s take a look at the characteristics of these policies and compare them across different parameters:

Premium Rates

Long-term: You can expect an annual hike of 10%-15% on every expenditure due to the rising inflation; ranging from insurance to real estate. Nonetheless, that’s not the case with your long-term car insurance – thus helping you to manage your finances better. This is because your premium rates will be constant since the beginning of your policy. This means you don’t have to worry about a hiked premium every year.

Short-term: Regarding this car insurance type, you can expect a hike of 10%-15% every year. This means your premium will slightly increase with each passing year.

OD Premium Rates 

Long-term: There are many advantages associated with subscribing for long-term coverage. For being a loyal customer, your insurer will provide several rewards including ‘Own Damage’ discounts. This means you don’t have to pay more money during the issuance of your policy.

Short-term: For your short-term car insurance policy, OD premium rates are not applicable. Hence, to avail of this benefit, you have to purchase the long-term policy.

No Claim Bonus Benefits 

Long-Term: By choosing this policy, you can avail a no-claim bonus discount of up to 20%. Again, this discount is provided because the customer has committed to a long-term deal, which is beneficial for both parties; the other one being your insurance provider, of course. Hence, eligible clients can expect a higher no-claim bonus with this plan.

Short-term: NCB is available on short-term car insurance policies as well and is an added benefit. However, the period that will be considered for this bonus will be shorter as compared to long-term policies. The same can be said of the discount amount.

Old Vehicles or Leased Cars

Long-term: Long-term policies do not apply to old vehicles. This is typical because older cars may not last for more than 3 years. Hence, it makes sense that such policies are designed exclusively for new vehicles. The same applies to leased vehicles.

Short-term: This insurance is perfect if you have an old car or you’re actively seeking a temporary vehicle. The main reason for this is that you won’t be owning either for 3 years.

Make sure to compare car insurance online before selecting the appropriate policy. Remember to purchase your third party car insurance online as it’s been made compulsory by law. According to many experts, the best online platform to buy your car insurance is Bajaj Allianz General Insurance.

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