How to Transfer Insurance After Buying a Second-Hand Car?

While purchasing a pre-owned car, documents such as a registration certificate (RC) and insurance need to be transferred as well. However, transferring automobile insurance can often get a bit confusing for first-time car buyers. This blog helps you learn about how a used car insurance transfer works, its significance, the documents required and more. Read on!

Why is Vehicle Insurance Necessary?

In India, if you own a car, it is mandatory for you to purchase car insurance under Section 146 of the Motor Vehicles Act, 1988. Otherwise, you are not legally allowed to drive.

Driving a car without valid insurance may lead to heavy penalties and fines. It is primarily because, in the event of an accident, you may not be able to bear the entire cost from your pocket if you are at fault. Hence, your insurer has to pay for the same.

A third-party vehicle insurance policy in India typically covers property damage, vehicle damage, accidental death and injuries. There are also more comprehensive policies covering third-party liabilities and damages from unforeseen situations such as fire, theft or natural calamity.

Why is It Important to Transfer a Car Insurance Policy?

While you are purchasing a pre-owned car, it is extremely essential to transfer the car insurance policy from the previous owner to your name. In case of an accident resulting in third-party liability, you must file a third-party claim with the insurer to receive compensation.

This is because the policy is registered in the name of the previous owner. As a result of which you will have to pay for the compensation from your pocket. Moreover, it is also mandatory for any vehicle owner in India to have a valid car insurance policy registered under his/her name.

Similarly, it is also important for the previous owner to make sure that the insurance policy is in the name of the current owner. Otherwise, the previous owner might be held accountable as the insurance policy of the vehicle is in their name.

What Happens If I Don’t Transfer Car Insurance?

In case you do not transfer the car insurance of your vehicle even though you are legally owning the vehicle, you will not be able to file claims in case of any third party damages. Hence, any claim you file will get rejected by the insurer.

Moreover, it is also illegal to drive your car in India without a valid car insurance registered under your name. If you are caught doing so, the penalty for a first-time offence is Rs. 2,000 while the penalty for subsequent offence is Rs. 4,000. You could also face imprisonment for repeat offences.

It is always recommended when buying a pre-owned car that you file for a used car insurance transfer request within 14 days from the date of purchase.

Required Documents to Transfer a Used Car Insurance Policy

If you are looking forward to transferring your used car's insurance policy, here are some of the documents you would require:

• Insurance policy documents of the old car.
• Registration certificate or RTO receipt.
• Copy of Form 29: car ownership transfer notice.
• Form 30
• No objection certificate (NOC) from the previous car owner.
• Application form for the transfer (duly filled).
• Inspection report provided by the insurer.
• Some insurers might ask for a no-claim recovery or pollution under control certificate (PUCC).

Also Read - Top 10 Factors Affecting the Price of a Second-hand Car

Will a No Claims Bonus Transfer From the Previous Owner?

No, the NCB or the No Claim Bonus cannot be transferred from the previous owner as it is associated with the owner of a car and not the car itself. In the process of used car insurance transfer, there is an exception: everything except the NCB cannot be transferred from the previous owner.

No claim bonus is basically a reward system offered by insurance companies to their loyal customers for driving their cars safely and for not making any claims during the year. The percentage of NCB is the portion which acts as a discount on the renewal of policy premium.

What Happens If Your Vehicle Meets an Accident Before Insurance Transfer?

If your vehicle meets an accident even before the insurance is transferred in your name, in such a situation insurance companies might reject your claim. In case the RC (Registration Certificate) transfer is under process, the concerned insurer is liable to pay third-party compensation for a period of 14 days from the date of sale.

Once the 14-day period is over, it is the responsibility of the new owner to bear all the third-party compensation costs. If the insurance is not transferred in your name, the insurer will not indemnify you for the damages to your vehicle or to yourself within the first 14 days from your buying date. As per law, it is the responsibility of the new owner to have the automobile insurance policy transferred to his/her name.

Also Read - Loan For Second Hand Cars: Here's How You Can Get it Easily

To Conclude

If you buy a pre-owned car, it is your responsibility to apply for a used car insurance transfer and get the policy transferred in your name. Driving without a valid insurance policy is illegal and may lead to a heavy penalty and fines. Moreover, in the event of an accident, the insurer might reject the claim, and you have to bear the entire expense from your pocket.

If you are looking forward to buying a pre-owned car, consider availing a second-hand car loan from Poonawalla Fincorp. Poonawalla Fincorp’s Pre-Owned Car Loan is offered at affordable interest rates, flexible repayment tenure and no foreclosure charges if paid from own funds. Apply now!

Frequently Asked Questions

1. Is it possible to change the name of car insurance?

Yes, a name change is possible in car insurance transfer. For that, you will have to submit certain documents such as the transfer application form (duly filled), the previous owner's NOC, Form 29, Form 30, an inspection report from the insurer, and the registration certificate of the vehicle.

2. Can I transfer my used car insurance to a new car?

Yes, you can transfer your previous vehicle’s insurance to your new car.

3. Is it possible to transfer your NCB from your old car to your new car?

Yes, it is possible to transfer your insurance from your old car to your new car along with the No Claim Bonus. A no-claim bonus is allowed to the policyholder for not making any claims during the policy year.

4. What are the benefits of transferring insurance to a pre-owned car?

There are several benefits of transferring insurance to a pre-owned car. It includes third-party compensation expenses, and accidental damage protection for your vehicle and also it increases the car’s marketable value.

Disclaimer

We take utmost care to provide information based on internal data and reliable sources. However, this article and associated web pages provide generic information for reference purposes only. Readers must make an informed decision by reviewing the products offered and the terms and conditions. Pre-Owned Car Loan disbursal is at the sole discretion of Poonawalla Fincorp.
*Terms and Conditions apply