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Buying a second-hand car? Here's how to transfer its motor insurance
'Transferring a car insurance policy in India involves multiple steps according to regulatory guidelines,' said Paras Pasricha, business head for motor insurance at Policybazaar.com.
The seller must inform the insurance company about the vehicle changing hands and fill out Forms 28, 29 and 30, which are available on the website of the Regional Transport Office (RTO). 'It is essential to get a clearance certificate and proof of sale before proceeding,' Pasricha explained.
-Valid insurance copy
-Original vehicle registration certificate (RC)
-Sale agreement
-Pollution Under Control certificate
-Buyer's address and identity proof
-A formal request for policy transfer
'The new owner's name must be endorsed on the RC before initiating insurance transfer,' said Pasricha. The insurer will inspect the vehicle for its condition and determine the revised premium or coverage.
Once this is done, the policy will be endorsed with the buyer's details, serving as the legal acknowledgment of transfer. 'If the car was financed, a No Objection Certificate from the financier is also required. A nominal transfer fee is usually charged,' he said.
'Mere change in the vehicle RC is not sufficient to protect against future liabilities. Insurance contracts work on the principle of insurable interest, which means the claimant must be the owner of the vehicle on the date of accident to get the benefit of insurance protection,' said Udayan Joshi, chief operating officer at SBI General Insurance, emphasising the importance of aligning the RC and insurance details.
Common mistakes
Second-hand car buyers typically make four errors while transferring insurance policies to their names, according to Pasricha. These are:
-Continuing with the seller's old insurance policy without reviewing or customising coverage.
-Ignoring vehicle inspection, assuming it's optional.
-Overlooking transfer rules for interstate purchases, such as updating road tax, RC, and insurance.
-Failing to check if add-ons or the Insured Declared Value suit their needs.
Delaying initiation of ownership change in the insurer's records is another common mistake, said Joshi. 'This often leads to non-admissibility of claims pertaining to vehicle damages. Given the simplified and convenient processes adopted by insurers, it is advised to intimate your insurance company immediately upon submitting your request to the RTO office.'
The 14-day window and delays
Under Section 157 of the Motor Vehicles Act, a buyer must transfer an insurance policy within 14 days of purchase. 'If this is delayed, most insurers allow a conditional transfer but may require fresh vehicle inspection,' Pasricha said.
Joshi said that failure to act within 14 days could lead to accident claims being rejected. 'Beyond 14 days, if the vehicle has not met with any accidents, insurers may still allow ownership transfer after verifying the vehicle's condition,' he notes.
Loans, add-ons and other challenges
In cases where the seller has an active loan or hypothecation on the vehicle, the buyer must ensure this is cleared to remove hypothecation from the RC. 'As far as add-ons like zero depreciation cover are concerned, most insurers allow continuation of the same coverage post verification of the vehicle condition,' Joshi said.
Pasricha said that some insurers can complete the transfer within 2–5 working days if all documents are in order, and a few even offer same-day processing
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