Insurance for Used Car
Whether you're buying or selling a used car, there are some things about used car insurance you must understand. Read on to know more.
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Contrary to popular belief, more people are open to the idea of buying used cars nowadays as they are less expensive, come with lower premiums and are suited for first-time drivers. However, before you make a purchase, you must understand the basics of used car insurance.
Wondering how does insurance work when buying a used car? There are many vital things you should be aware of, such as the transfer process of the car insurance policy, retaining the no-claim bonus (NCB) certificate, its transfer, etc.
Here's what you should keep in mind to clinch a hassle-free deal:
Documents to keep in hand
To know how does insurance work when buying a used car, as the buyer, you must first understand that to transfer the insurance policy to your name, you will need several documents. This includes car sale proof, proof of delivery of the car, a new registration certificate in your name, cancellation of policy request (from the seller), and policy transfer application from you.
As a seller, you need to get an NCB retention letter from the insurance firm. For cancellation of insurance policy, you will need to submit the policy letter in original (issued to you at the time of policy purchase), Form 51 (insurance certificate), and NCB retention certificate.
Understanding the no-claim bonus
A no-claim bonus is a benefit you receive if you do not make a claim in the previous year. The discount could range from 20% to 50%. The NCB depends on the type of policy opted for and the number of claim-free years. Remember that while insurance policies are transferable, NCBs aren't.
NCBs come with a strict rule that one must claim the bonus within three years of policy purchase. But if the owner is buying another car and wishes to switch insurance companies, the NCB can be transferred.
Ownership policy transfer
After you apply to transfer your ownership at the RTO, make sure you check the status of the policy transfer to see if it has been transferred in the buyer's name. As soon as the policy is transferred, apply for an NCB certificate from the insurance firm. Of course, if you are on the other side of the deal (if you're the buyer), you must learn how does insurance work when buying a used car.
You should be aware that the insurance policy transfer (after the sale of the car) can take 14 days. In case it exceeds the stipulated period, any of your claims can be rejected. IRDAI rules clearly state that to settle insurance claims, the insurance policy and the car's Registration Certificate (RC) should both have the same name and address.
To transfer the insurance policy, as a seller, you have to convey this information to the insurance firm in writing. Also, the payment of pro-rata charge will be made by the seller to recover the NCB, which is from the date of transfer to the expiry date of the policy.
It's important to read the car insurance document carefully to ensure a stress-free claim settlement, instead of assuming things and causing confusion. So, before opting for any policy, ensure you have understood all the terms and conditions of the insurance company.
Selection of insurance company
Whether it's new or used car insurance policy, make sure you choose an insurance policy that offers the coverage you need, has a fast claim settlement ratio and smooth claim processing. For example, Tata AIG's Auto Secure Private Car Package Policy offers third-party liability and personal accident cover. You can also choose from 13 add-ons to strengthen the policy.
Make sure you #ThinkAhead and get the right used car insurance policy for your vehicle so that you and your loved ones are always protected.