As drivers, we try to avoid getting into any road accidents while driving our cars. However, despite our best efforts, some road accidents are unavoidable. During such incidents, a car insurance cover is a necessity to have at all times to reduce the liability of the parties involved in the accident.
While buying a used car, it is important that the transfer of a valid car insurance is done from the previous owner to the new owner. This is a necessary step that often gets missed when buying a used car and increases the chances of the new owner being liable for the damages should an accident occur. Here, we break down why you need car insurance when buying a used car as well as how to transfer the existing car insurance after you buy a used car.
Why is car insurance required?
Under the Motor Vehicles Act, 2019, the Government has made it mandatory for every vehicle that operates on road to have a motor vehicle insurance to ensure safety and bearing in mind the financial strain one has to go through after meeting such an accident. The policy holder should have a third-party insurance cover while applying for the insurance plans. The third-party insurance is mandatory in case of road accidents caused by the vehicle owner or any other person on another vehicle. Here, one must note that the vehicle insurance coverage may or may not cover damages made by the owner. In other cases an insurance cover for the vehicle might be required if there is a theft or damages to the vehicle due to natural calamities. Thus, having car insurance coverage helps to protect us from unexpected penalties and also insures damages caused to the third-party, such as cost of treating injuries due to vehicle accident and cost of damage repairing.
Why do you need to transfer car insurance?
Even if one buys a used car or a second hand car, apart from the RC transfer and the other documents that must be transferred, it is also necessary to get the car insurance policy transferred for protection against future liabilities. Under Section 157 of the Motor Vehicles Act, the car insurance should be transferred to the new owner with 14 days of buying the used car. So, if there are damages done to a third-party or third-party vehicle, the insurance policy should be in the new owner’s name to file for the claim, or else the whole liability for the damages will be on the new owner.
What happens if I don’t transfer car insurance?
If car insurance is not transferred to the new owner within 14 days of buying the used car, the new owner will be at risk of bearing the entire liability of an accident that they may get into. The insurance provider will reject the insurance claim as it is not in the name of the new owner. Additionally, the new owner could be further penalized with a suspension of driving license as well as legal proceedings.
What is the process for car insurance transfer?
After buying a used car, it is a necessary step to get all the papers transferred in the new buyer’s name. In this regard getting the transfer of a car insurance policy is also crucial to protect the seller and the new buyer from future legal hassles and fines.
Car Insurance Transfer for all Insurance provider
The following documents needed for the transfer of a car insurance policy for a used car are as follows:
- The original car insurance policy paper
- Receipt form RTOs for Forms 28, 29, and 30 (duly signed by both seller and buyer)for proof of the sale of the car
- Copy of the new RC
- NOC from the original policyholder
- Address proof of the buyer
- Inspection Report of the Insurance Company
- A New Proposal Form stating the proof of sale and RC transfer of the used car
- Other documents, as per the requirement of the respective Insurer, such as the ‘NO Claim Recovery’ or Pollution Under Control Certificate, etc.
- Application form from the respective Insurer Company
- Nominal Transfer Fee
- Buyer and Seller’s Passport-sized photos
Some insurance companies require only an email from the policyholder to transfer a car insurance policy. Here is a template for such an email for your understanding: Car Insurance Email Template
Will the No Claims Bonus transfer from the previous owner?
A ‘No Claims Bonus’ is basically a reward from the insurance company to the drivers for not making any car insurance claim during that policy year. The bonus earned can be used to reduce the cost of the renewal premium. The greater the number of years any driver has not made the claims, the more bonus is earned, further reducing the cost of the insurance.
If a car insurance gets transferred in another person’s name, the older policyholder can retain the NCB. A retention letter must be issued stating that the NCB are to be retained by the old policyholder. This letter would make the previous car insurance policy holder eligible for the NCB on the insurance premium of their new car. Even if the four wheeler gets sold to a new buyer, the ‘No Claim Bonus’ can never be transferred.