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A vehicle insurance policy must include the same name and address as the registration certificate as per IRDA. However, in India, post-loss insurance grievances are prevalent due to a lack of information regarding vehicle insurance, also resulting in more claim denial. Therefore, if you have recently sold an old car, it is vital to understand that the car insurance transfer is crucial while buying and selling used cars.
This step-by-step guide on how to transfer insurance of second hand car will walk you through the process and help you understand its importance.
Transferring car insurance is also mandatory under Section 157 of the Motor Vehicles Act. Both seller and buyer must notify the Insurance Council to transfer the policy within 14 days from the date of purchase. The following steps help transfer used automobile insurance:
Step 1: Once you get the ownership of the used vehicle, apply for a used car insurance transfer
Step 2: Collate all the required documents to start the used car insurance transfer
Step 3: You can continue the existing one or add some other benefits by paying a little extra premium based on the policy renewal period.
Step 4: Make the payment of the premium as per the policy
Step 5: Submit all the required documents along with No Objection Certificates (from the previous owner/bank in case it is a financed car)
Step 6: Further, your car will be assessed by the insurance company
Step 7: After this assessment, you will get the policy transferred on your name
To transfer vehicle insurance, you’ll need the following documents:
If your Regional Transport Office (RTO) extends ownership transference in the registration certificate, you can transfer car insurance with the other documents. However, you need to submit it to the insurance company when you receive the new RC.
Also Read: Documents You Need to Sell Your Car
Let’s understand the importance of transferring the pre owned car insurance with below examples:
Buyer’s Case: Suppose Ram bought pre owned car a few months ago but forgot to transfer the car insurance in his name. Unfortunately, he met with an accident after a month.
Although Ram incurred hefty expenses, the insurance company denied his insurance claim. Later on, he realized the denial was because the policy was still in the former owner’s name; he is not entitled to get the coverage under the vehicle insurance policy.
Seller’s Case: Suppose Sakshi sold her car with an active auto insurance policy for one more year to the buyer. But, neither she nor the buyer takes the pain to transfer the existing policy. Then, after a few months, she got the notice to settle a claim made by the third party because of an accident where the buyer was also involved.
So, now that the policy is still in her name, she is legally obligated to compensate the third party.
Thus, in both circumstances, it is evident that either the seller or the buyer should take the initiative to have the policy moved to the new owner’s name to avoid chaos later.
The NCB is a reward insurer offers to the insured for every claim-free year. In the case of car insurance, it is available as discounts on the insurance premium. Therefore, the longer you go without filing a claim on your vehicle insurance coverage, the larger the deduction you will receive on the premium.
However, the seller can’t transfer the NCB to the new buyer with the existing auto insurance policy. But after the successful transfer of the policy, the seller can retain the NCB after acquiring an NCB retention letter from the insurance company and carry forward it to a new car insurance policy.
|No Claim Bonus Rates|
|No Claim Rates||Number of Years|
|After 1 Claim Free Year||20%|
|After 2 Claim Free Years||25%|
|After 3 Claim Free Years||35%|
|After 4 Claim Free Years||45%|
|After 5 Claim Free Years||50%|
How to Pick the Right Car Insurance?
It is essential to choose the insurance for your car wisely. However, the cost of auto insurance depends on many factors. Below are some important factors that help you to make an informed decision.
The Bottom Line
Car insurance is an integral part of owning a car. But when it comes to how to transfer insurance of second hand car, a lot of confusion arises. This guide will help you understand the process of insurance transfer for second hand car so that you drive with peace of mind.
Ques. Should I file for a car insurance transfer or a registration certificate transfer first?
Ans. First, you need to apply for a registration certificate transfer. Then, once you receive your new RC, apply for a vehicle insurance transfer within 14 days.
Ques. Can I apply for a car insurance policy transfer online?
Ans. You can download the application form from the official website of the vehicle insurance company to apply online.
Ques. Is there any fee for automobile insurance transfer?
Ans. You need to pay a minimum of Rs.50 as an application fee for transferring insurance. However, the amount may vary.
Ques. Can I continue my old insurance policy for my new car?
Ans. If you have earned NCB in your old policy, you can continue it for your new car. But, if there is no NCB, you need to buy a new vehicle insurance plan for a new car.
Ques. Can I keep my old insurance policy after selling my car?
Ans. It is advisable to keep the old insurance policy until you complete the sales transaction. After transferring the ownership of the vehicle, you should also apply for transferring the auto insurance to avoid car insurance-related issues later.
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