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Business Standard
02-08-2025
- Automotive
- Business Standard
Spike in Used Car Purchases? Here's What You Need to Know About Transferring Insurance
VMPL New Delhi [India], August 2: 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.
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Business Standard
15-07-2025
- Automotive
- Business Standard
Buying a second-hand car? Why insurance transfer is crucial for buyer
When you buy a second-hand car, transferring ownership isn't just about the Registration Certificate (RC). Equally critical is transferring the car's insurance policy to your name. Experts warn that failing to do so can lead to claim rejections, penalties, and even legal trouble. Here's a step-by-step explainer on what happens to car insurance when you buy a used car, and how to get it transferred smoothly. Why insurance transfer is crucial 'Transferring the existing insurance policy to the new owner's name is not just a formality, it is both legally mandatory and financially crucial,' says Saurabh Vijayvergia, founder & chief executive officer of CoverSure. The law allows a 14-day window for completing this process. Beyond that, any claim made under the old owner's name can be rejected outright. 'A car insurance policy has two parts, own-damage and third-party liability. While third-party cover automatically transfers, the own-damage section needs formal transfer. Without it, no own-damage claims will be honoured,' said Neel Chheda, chief underwriting and data science officer of TATA AIG Insurance. According to Paras Pasricha, business head, motor insurance at the process involves submitting necessary documents and paying a minimal transfer fee to the insurer. The required documents include the original RC, valid insurance certificate, PUC certificate, Form 29 and 30 (signed by buyer and seller), address and ID proofs, and, if applicable, a No Objection Certificate (NOC) from the bank. What happens if you don't transfer insurance? If you drive without transferring the insurance, you could face serious issues. 'The new owner might face claim rejection and penalties for driving without a valid insurance policy, while the seller could face legal issues if the buyer meets with an accident,' Pasricha warns. While the third-party liability cover automatically continues under Section 157 of the Motor Vehicles Act, own-damage coverage does not, says Surender Tonk, vice-president, Insurance Brokers Association of India. 'If the insurance is not transferred, the own-damage section of the policy will not work, and any damage or loss to the insured vehicle will not be payable,' he says. 'If the policy isn't transferred, the new owner is essentially uninsured for own-damage claims. Any accident-related expenses will have to be borne out of pocket,' adds Chheda. Can you modify or switch insurance? Once the policy is in your name, you are free to upgrade or modify it. 'As a buyer, you do not have to stick with the previous owner's insurance terms. You can and should upgrade to a comprehensive cover or even switch insurers entirely,' says Vijayvergia. However, Tonk points out that while the base policy can be transferred, some add-on benefits like zero depreciation may not carry over to the new owner. What about the No Claim Bonus (NCB)? A common misconception among buyers is that the seller's NCB (discount for claim-free years) gets transferred with the car. That's not true. 'NCB is linked to the individual policyholder, not the vehicle,' says Arti Mulik, chief technical officer, Universal Sompo General Insurance. 'The seller can retain the NCB for their next vehicle, but the buyer starts fresh,' Mulik said. 'The entitlement of NCB follows the fortune of the original insured and not the vehicle or the policy. Buyers don't get any benefit from the seller's NCB,' adds Chheda.
