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Transferring Car Insurance from One Person to Another
- Author :
- TATA AIG Team
- Published on :
Whenever individuals choose to purchase a second-hand car, they are highly attentive to important details. They consider various factors, such as the brand, model, running of the vehicle, etc., to ensure the correct evaluation of the car. However, alongside the vehicle, it is also important to get the relevant car documents transferred to the new owner.
With regard to documentation, both buyers and sellers have a common question: can car insurance be transferred to the new owner? To answer in a word, yes. In fact, forgetting the car insurance transfer to the new owner will lead to claim rejection which can come as a shocking, unpleasant surprise.
Before understanding how to transfer car insurance, let’s explore why it’s so important.
Why is it Important to Transfer Insurance to New Owner?
The importance of car insurance cannot be contested. It protects your car financially in the event of any unfortunate eventuality. However, without the car, the four-wheeler insurance becomes redundant.
Therefore, if you are selling your car, ensure that you have completed the car insurance name transfer to the new owner. And similarly, if you are purchasing a second-hand car, check whether the car insurance ownership transfer has been completed by the previous owner. Here are two pertinent reasons why car insurance transfer is stressed upon:
Prevents Liabilities in the Future
Car insurance takes care of third-party liabilities. This means that if you end up in an accident and need to pay for damages to a third party, your four-wheeler insurance can take care of it on your behalf. However, without having the car insurance transferred to the new owner, the claim made by the new owner will not be valid. This rejection of the claim means you will have to pay for the third-party damages from your pocket.
Alternatively, if the previous owner does not complete the car insurance name transfer, the previous owner can be held liable to pay for the damages to a third party.
Retaining the No Claim Bonus (NCB)
The NCB is a discount on the premium amount that is given to the insurance holder upon policy renewal. This discount is applicable if the insured member has not made a claim during the term year. When you sell your car and transfer insurance to the new owner, you can avail of your NCB on the policy of your new car. For this, you will have to intimate your insurance provider that you have sold your car and obtain the NCB certificate from them. However, insurance holders are not eligible to receive the certificate unless the car insurance ownership transfer has been completed.
How to Transfer Car Insurance to the New Owner?
When you sell or purchase a second-hand car, there is often a question in the minds of both the seller as well as the buyer: can car insurance be transferred to the new owner? The answer is yes.
In fact, once the car is purchased by the new owner, the car insurance of the previous owner automatically becomes invalid. This is because the Insurance Regulatory Authority of India (IRDAI) mandates that the name and the address on the vehicle registration certificate and the insurance documents must match for a claim to be raised. Naturally, this is impossible without having done the car insurance transfer to the new owner.
Additionally, aside from the on-paper complications, not having the car insurance transferred to the new owner can cause some practical hindrances. In the event of an accident, if the car is not secured with insurance, the claim to incur the damages will be rejected.
To avoid this, here are the documents required to transfer four-wheeler insurance to the new owner:
A new copy of Form-29 or the vehicle registration certificate
The documents of the previous car insurance policy
The NOC (No Objection Clause) certificate from the former insurance holder
The form for the new application
The inspection report (which is carried out by the insurance provider)
The difference amount from the NCB (No Claim Bonus)
The aforementioned documents need to be submitted along with a transfer fee payable to the insurance company.
While selling the car, the ex-owner signs on the registration and insurance documents. However, this transfer is exempt from the transfer of the NCB. When transferring the insurance to the new owner, the seller can retain their NCB by providing their insurance provider with the NCB retention letter. The NCB retention letter enables the previous insurance holder to avail of the NCB on the policy of their new car.
How to Get the NCB Retention Letter?
To procure the NCB retention letter from your insurance provider, you will be asked to share the following documents:
A letter requesting policy cancellation
Original copy of the insurance policy along with the insurance certificate (Form-51)
Notice of the transfer of ownership of the car (Form-29)
Application for the intimation and transfer of car ownership (Form-30)
Copy of the RC book with the name of the new owner
Proof of car delivery to the new owner
With the aforementioned documents, you can even complete the car insurance transfer online. To enhance convenience while acknowledging the requirements of the quick-paced consumers, insurance providers have enabled car insurance transfer online.
Important Details About the Car Insurance Ownership Transfer
The process of transferring the car insurance policy formalises the withdrawal of the seller from the insurance policy and the subsequent admission of the new owner of the car under the insurance cover. Section 157 of the Motor Vehicles Act mandates that both parties complete the transfer of the four-wheeler insurance within 14 days from the purchase date.
During the span of these 14 days, the third-party cover remains active as it is automatically transferred upon purchase. However, if it is comprehensive car insurance, only the third-party liability coverage is passed on to the new owner. If the transfer of insurance is not completed within the specified 14-days window, the third-party cover gets automatically annulled.
While third-party cover is mandatory, second-hand car owners are always advised to invest in comprehensive car insurance. The comprehensive policy by Tata AIG offers complete peace of mind to the vehicle owner as it takes care of a host of scenarios to protect your car.
What Other Documents Need to Be Provided to the New Owner of the Car?
In addition to the transfer of insurance, here are some important documents that the new owner of the car needs to get from the seller:
Vehicle registration certificate
Original car invoice
NOC from the car financer
Receipts of road tax
In addition to the above, the seller will have to sign Form-29 and Form-30 for the transaction to be effective.
Any important and big purchase requires careful planning. When purchasing a second-hand car, it is important to unfailingly ensure the transfer of ownership, rights, and insurance to the new owner. The Motor Vehicle Act of 1988 mandates that the responsibility for transferring car insurance is that of the seller. Only after completing this transfer can the sellers be free from legal and financial liabilities
Disclaimer / TnC
Your policy is subjected to terms and conditions & inclusions and exclusions mentioned in your policy wording. Please go through the documents carefully.