PolicyBazaar Announces ‘Monthly Mode’ Car Insurance Policy: Here’s How It Works

Would you choose to get insurance for your vehicle on a monthly basis? The option might not have been in action till now, but a new policy, termed ‘Monthly Mode Car Insurance Policy’ gives you that. PolicyBazaar, an online insurance marketplace, has announced a flexible monthly mode car policy which will allow customers to pay for their own damage coverage on a month-by-month basis instead of committing to a full-year policy upfront.

Such a policy is designed for those customers who prefer short-term insurance coverage or those who would like to spread out their payments. But how does it work, and what should you keep in mind before taking up such a policy? Let’s break it down.

How would a monthly car insurance work?

This monthly mode of insurance policy provides limited coverage with automated setups. Here’s how -

Short-term coverage: Rather than a promise of a whole year, this plan comes with insurance coverage for just one month at a time. At the end of every month, a new policy is issued and the cycle continues.

Automatic Renewals: In order to ensure the continuity of the policy, PolicyBazaar will auto-renew the policy every month, provided the payment goes through by policyholders.

E-mandate for Payments: When you buy the first monthly policy, you will need to set up an automatic payment mandate for deductions each month.

Own-Damage Cover, Only: It is important to note that this plan only covers damages to your own vehicle. The third-part (TP) insurance, which is legally required, will still need to be bought separately as a full-year policy.

Key things to keep in mind

Here are some key exclusions and policy terms and conditions you should consider;

No Mid-Term Add-Ons: Once you choose this policy, you won’t be able to add or remove extra covers (like zero depreciation) during the 12-month cycle.

NCB Considerations: If you make a claim within the policy term, your No Claim Bonus (NCB) remains fixed for the first year. However, if you stop paying and let your policy lapse, you lose the NCB.

IDV (Insured Declared Value) Rules: Your car’s IDV remains fixed for the first 12 monthly policies, but it will be reassessed at the end of the one-year cycle as per standard rules.

Grace Period for Payment: If you miss a payment, there is a 15-day grace period. After that, the policy lapses, and you may need to go through a vehicle inspection before renewal.

Higher Premium If You Stop Renewing: An extra charge of around 10-15 per cent is added to monthly policies to offset the risk of people claiming and then discontinuing coverage.

How to know if this policy is the right choice for you?

Such a policy provides flexible monthly coverage but comes with some key exclusions to consider. It would be ideal for those who;

• Prefer to pay in smaller, monthly amounts instead of a lump sum

• Need short-term insurance for temporary use of the vehicle, such as for a second-hand car

• Want flexibility without a long-term commitment with a comprehensive motor insurance policy

However, if you prefer stability and don’t want to risk losing your coverage because of missing out on payments this policy would not be an ideal choice. Additionally, for those who want access to add-ons in the mid-term (or whenever they prefer) - an annual policy might still be the better choice.

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