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Buying a used car can be a smart and budget-friendly decision. However, one important step that many buyers overlook is the transfer of car insurance. In India, transferring the insurance policy from the previous owner to the new one is not just a formality—it’s a legal requirement. If you fail to do it, you could face claim rejections or even penalties in case of an accident. This blog will explain everything you need to know about transferring car insurance when you buy a used vehicle.
Why Insurance Transfer Is Important
When you buy a used car, the ownership changes hands—but unless the insurance policy is transferred, the coverage remains in the name of the previous owner. This can cause problems later. For example, if the car meets with an accident before the insurance is transferred, the claim will not be accepted because the policyholder’s name does not match the current owner.
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Moreover, according to the Motor Vehicles Act, 1988, it’s mandatory for every vehicle on Indian roads to have valid third-party insurance. Hence, transferring the insurance ensures you remain legally compliant and financially protected.
Types of Car Insurance Transfer
There are usually two types of insurance transfers when buying a used car:
1. Third-Party Liability Insurance Transfer:
This is a basic form of insurance that covers damage or injury caused to third parties. The transfer of third-party insurance happens automatically when vehicle ownership changes, but you still need to inform the insurer to update the records.
2. Comprehensive Insurance Transfer:
This covers both third-party liability and damage to your own vehicle. If the used car has a comprehensive policy, you must apply to the insurance company to transfer it into your name within 14 days of the vehicle’s purchase.
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Documents Required for Car Insurance Transfer
To transfer car insurance, you’ll need the following documents:
- Original policy document.
- New RC book (or Form 29 & 30 if RC is under process).
- Copy of the previous owner’s insurance policy.
- Copy of the transfer of ownership proof (sale agreement).
- Valid Pollution Under Control (PUC) certificate.
- Inspection report (if required by the insurer).
- No Objection Certificate (NOC) from the previous owner.
- Address proof and ID proof of the new owner.
Having these documents ready helps speed up the process and avoid unnecessary delays.
Step-by-Step Process to Transfer Car Insurance
1. Inform the Insurance Company:
As soon as you purchase the used car, contact the existing insurer and inform them about the ownership change.
2. Submit Required Documents:
Provide all necessary documents, including proof of ownership transfer and ID details.
3. Vehicle Inspection:
The insurance company may inspect the car to verify its condition before approving the transfer, especially for comprehensive policies.
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4. Pay Transfer Fee and Adjust Premium:
A nominal fee (usually ₹200–₹500) is charged for the transfer. The insurer may also adjust the premium based on your profile or location.
5. Receive Endorsement:
Once the transfer is complete, you’ll receive an endorsement certificate with the updated name and details. This acts as proof that the policy is now legally in your name.
What Happens to the No Claim Bonus (NCB)?
The No Claim Bonus (NCB) belongs to the policyholder, not the car. That means the seller retains the NCB, even if the insurance policy is transferred to you. However, as the new owner, you can start building your own NCB over time by avoiding claims during policy renewals.
Key Tips for Smooth Transfer
- Always verify the insurance policy’s validity before buying the car.
- Initiate the transfer process within 14 days of purchase to avoid coverage gaps.
- Make sure the RC and insurance policy have identical details.
- Consider switching insurers during transfer if you find a
- better premium or benefits.
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Conclusion
Transferring car insurance when buying a used car may seem like a small step, but it’s one of the most crucial parts of the purchase process. It ensures that you remain protected, compliant with Indian law, and eligible for claims if any mishap occurs. Always complete the insurance transfer immediately after ownership change and review the coverage to ensure it meets your needs. With the right paperwork and timely action, you can enjoy your new ride with peace of mind.