Spike in Used Car Purchases? Here's What You Need to Know About Transferring Insurance

Hindustan Times

a day ago

India's second-hand car market is booming. In 2024 alone, over 54 lakh used cars were sold—outpacing new car sales, which stood at 4.1 million. Several factors are driving this trend: the widening price gap between new and used vehicles, stricter emission norms pushing up prices of new models, and the rise of organised platforms that make the resale process easier and more transparent.
However, amid the excitement of choosing the right model and finalising the paperwork, one important step is often overlooked—transferring the insurance policy.
Why Insurance Transfer Is Non-Negotiable
Under the Motor Vehicles Act, it is mandatory that car ownership must be transferred to the new owner within 14 days of purchase. While the Act doesn't explicitly penalise delays in updating the insurance, failing to transfer the policy can lead to own damage (OD) claim rejections because of mismatched ownership. This leaves the new owner financially vulnerable in the event of an accident.
'An untransferred insurance policy puts both the buyer and seller at risk. When making a claim, mismatched ownership details can effectively render the insurance void, as if there were no coverage at all.' – Mallikarjun Mallannavar, Chief Claims Officer at Royal Sundaram
The Step-by-Step Transfer Process
Transferring car insurance is simpler than it sounds—and it's one of the most important steps after buying or selling a car. Here's how you can do it:
Step 1: Inform the insurer
Notify the insurance company about the change in ownership as soon as the sale is complete.
Step 2: Gather the required documents
You will need the following documents:
Form 29 and Form 30 (available from the RTO)
Vehicle's Registration Certificate (RC)
Pollution Under Control (PUC) certificate
Existing insurance policy documents
No Objection Certificate (if the vehicle was financed)
Step 3: Submit the documents
Submit these documents to both the insurer and the Regional Transport Office (RTO).
Step 4: Vehicle inspection
Depending on the insurer, a quick vehicle inspection may be required.
Step 5: Pay the transfer fee
A small fee is charged to process the insurance transfer.
Step 6: Receive the updated policy
Once approved, the insurer will issue an updated policy in your name as the new policyholder.
What Happens If You Skip It?
Apart from legal penalties, you may find yourself without insurance cover in case of an accident. Third-party claims, although mandatory, may be delayed if policy details don't match the ownership. The previous owner could also be dragged into legal complications if the car causes damage or injury after the sale.
'Failing to transfer the insurance can land the previous owner in legal trouble if the car is involved in an accident,' says – Mallikarjun Mallannavar, Chief Claims Officer at Royal Sundaram. 'That's why transferring the policy isn't just a formality—it's a crucial legal safeguard.'
Final Thoughts
As more Indians opt for pre-owned vehicles, understanding the legal and financial implications of car insurance is crucial. Insurance transfer is not just paperwork—it's a vital step to ensure continued protection. Whether you're buying or selling, make sure the insurance is updated promptly to avoid complications later.
Note to readers: This article is part of HT's paid consumer connect initiative and is independently created by the brand. HT assumes no editorial responsibility for the content, including its accuracy, completeness, or any errors or omissions. Readers are advised to verify all information independently.
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