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Car Insurance Plans

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Multi Year Car Insurance Policy

As the name suggests, multi-year car insurance policy denotes the fact that the car insurance providers in India will offer coverage for up to 3 years instead of policies that provide only one year policy tenure. If you avail of multi-year car insurance policy, then you do not have to go through the hectic process of renewing your car policy every year. It is a long-term comprehensive car insurance plan that not only provides coverage for third-party claims but also safeguards your car against damage and compensates you for any injury or death.

However, this multi-year car insurance policy can only be purchased by those who have bought cars after 1st September 2018, and it is applied only for third party vehicle insurance. It has to be remembered that according to the Supreme Court, the Insurance Regulatory and Development Authority of India has made it mandatory for all general insurance companies of India that they have to offer multi-year third party car insurance plans to all the cars that are purchased after 1st September 2018. More than that, for a new car purchase, the multi-year car insurance comes with 3 years of third-party cover and 1 year of own damage cover. Once the first year is over, you can buy your ‘own damage cover’ for two years.

Advantages And Features of Multi Year Car Insurance Policy

The multi-year car insurance policy has come up with a sack full of benefits. To know more about its advantages and key features, have a look at the below mentions.


With this multi-year car insurance policy, you do not have to renew your car plan every year. Rather, it allows you to enjoy the benefits of comprehensive insurance coverage for three years at a time. Though it might seem that you are paying a heavy amount as the premium amount at the time of renewal, you are paying it collectively for three or five years, on the basis of your vehicle type. 

No Car Inspection

For some insurance companies, you need to go through the entire car inspection process at the time of the renewal, which is a complex and time-consuming process. A multi-year car insurance not only saves your time but also your efforts of going through these procedures. 

Harness Price Hike on Third Party Car Insurance

If you have a single-year car insurance plan, you need to remember that the prices of third-party cover are regulated by the IRDAI and get updated on a frequent basis. Generally, the price of third-party cover tends to go up. This means that every year you pay increased prices in case of a single-year policy. But having a multi-year car insurance policy means you buy third-party cover for multiple years at today’s prices.

Control Over Taxes

Similar to the price of third-party cover, taxes too suffer from inflation. Even after buying a car plan, you still need to pay Goods and Services Tax at the prevalent prices. In the case of, multi-year insurance, you don’t need to worry about a tax rise because you pay GST for many years at current prices only.

No Claim Bonus Benefit

Almost all insurance companies offer a No Claim Bonus (NCB), which is calculated on a yearly basis. With a multi-year policy, you get the applicable tier NCB in one go. You don’t need to wait for a year-on-year model to accrue the NCB.

Multiple Additional Discounts

Apart from the NCB benefit, as you are paying three years’ premium at once, you might be eligible to avail of a significant discount on the premium amount. Moreover, if you are a special needs driver, a member of a recognized automobile association in India, or have installed an anti-theft device in your car, you may be able to bring down your premium further.

Personal Accident Cover

In case of injury or death caused to the driver or the owner of the car, the company pays for the compensation up to a certain limit, depending on the insurer, under this policy. This limit depends on the nature of the injury. 

Add-on Covers Benefits

Apart from these in-built benefits, under a multi-year car insurance plan, you can also choose to avail of add-on covers to strengthen your policy, if it is available with your owner. Some of these additional covers are Depreciation Reimbursement, Key Replacement, Return to Invoice, etc.

Different types of Multi Year Car Insurance Policy

Multi-year car insurance policies can be of different types. Let’s have a look at them. 

  • Long-Term Comprehensive Policy – These types of multi-year car insurance plans come with both third-party (TP) and own-damage (OD) car insurance. It would be advisable to go for this type as it allows the car owner to get compensated not only for the third party liabilities but also, it protects your car from different types of perils. Generally, however, the policy cost tends to be a little bit higher than the other options but it is worth it.
  • Long-Term TP Short-Term OD – This plan offers you a 3+ year third-party car insurance along with 1 year of an own-damage car insurance policy. Though, the cost of this plan will be less than a long-term comprehensive policy, the insured person has to renew this plan annually for own-damage cover and liability only cover after 3 years to keep his/her policy active.
  • Long-Term Third-Party Coverage – This type of multi-year car insurance policy does not offer you any own-damage cover and only comes with the third party liability benefit, for three years. Though it is the most cost-effective one, this policy will not cover any damage incurred to your car in case of an accident or a mishap, and you will have to bear all the costs related to your own damage.

Coverages Under Multi Year Car Insurance Policies

To make the differences among the three types of multi-year car insurance policies more understandable and explicit, here is a table.

Type of multi-year car insurance policyNumber of years for third party coverNumber of years for the own-damage coverCost of the covers
Long-Term Comprehensive Policy3 years3 yearsExpensive
Long-Term TP Short-Term OD3 years1 yearLess expensive
Long-Term Third-Party Coverage3 yearsNILPocket-friendly

Basic Premium Pay for Long-Term Third Party Only Policy

As per the IRDAI, the premium amount that has to be paid for your car insurance policy depends upon the cubic capacity of your vehicle. The total premium amount is determined by dividing the yearly premium by the coverage duration and adding it with the rest of the premium deposit. Here is a comparative study of the premium amounts for each stage of the engine capacity of your car.

The capacity of the engineMulti-Year Third Party Car Insurance Premium
Less than 1000 ccRs. 5286
More than 1000 cc but less than 1500 ccRs. 9534
More than 1500 ccRs. 24305

Difference Between Multi-Year Car Insurance and Single Year Car Insurance

Multi-year car insurance and an annual or single car insurance plan are different in many aspects apart from the benefits and facilities. Have a quick look at the below table to understand the differences.

Parameters Single/annual car insurance plan Multi-year car insurance plan
RenewalEvery yearOnce in every 3 years
LawMandatory for every carMulti-year third-party insurance is compulsory for every new car
PremiumRegular premium due to single year paymentVarious discounts are available due to the bulk premium payment

Frequently Asked Questions

Yes, you can. A multi-year car insurance plan gives you the full flexibility to switch from one insurer to another for better coverage and benefit.

Anytime during the term of the policy, if you sell your car or purchase a new one, you can transfer your accumulated no claim bonus (NCB) to your new car and reap the benefits of discounted future premiums.

No, you cannot cancel any third party car insurance plan during the policy term, unless and until, you have a similar type of another third party insurance plan or in case, your car is no longer in use.

According to the order of the Supreme Court, if you have purchased a new car, it is mandatory to buy a multi-year car insurance policy.

There are various factors on which a multi-year comprehensive policy depends such as the make and model of your car, safety devices installed in your car, the purpose of the car, the area you are staying in, etc.

No, the third party only car insurance policies only offer your protection from third party liabilities. But few car insurance companies offer add-on covers to enhance protection.

Yes, you can. Your ‘own damage cover’ is subject to inflation. The car insurance premium of own damage cover also tends to increase over time, but when you buy a long-term or multi-year car insurance plan, you can harness the inflation by locking in prices for multiple years in one go.