If you are a car owner, you must be aware that car insurance aims to provide financial protection for a vehicle against unexpected risks, such as a road accident. The car insurance policy is useless if the car is no longer in your possession.
Selling your car can trigger emotions while bidding goodbye to a trusted companion. However, you must also guarantee that your car is well cared for in its new home.
While selling a car, you also transfer the Registration Certificate (RC) and your car’s insurance policy with its ownership. So, the obvious question that comes to mind – is how to transfer the insurance of a car.
Why is Car Insurance Transfer Important?
- In India, having car insurance is legally mandatory. However, upon selling your car, the insurance becomes null and void as you no longer own the car.
- The transfer of car insurance covers the new owner from accidents, third-party liabilities, and potential damage.
- The new car owner can avail of the same benefits as the former policyholder, which can lead to reduced premiums for subsequent renewals by the transfer of car insurance.
- A claim-free policy year earns you a No Claim Bonus(NCB), which provides a discount on your car insurance renewal premium. While selling your car, transferring the rewarded NCB is crucial to benefit from a discount on the renewal premium for your new policy. To succeed in that, you must inform your motor insurance company about the sale of the car and obtain the No Claim Bonus (NCB) certificate. You can only receive the NCB certificate once you successfully transfer the ongoing car insurance policy to the new car owner.
- Financial institutions would need you to update details in case of any changes in ownership.
How to Transfer Insurance of Car? Here’s how
The transfer of car insurance includes transferring the insurance policy to the new owner’s name. The buyer must initiate this to ensure car insurance coverage.
Transport department regulations state that the seller is responsible for this transfer process. The seller must have complete clarity on how to transfer vehicle insurance before initiating the process.
The procedure for transferring automobile insurance is usually simple and clear. It is essential to gather the required documents for the title transfer when purchasing a used car before you start the transfer process.
The process of transferring car insurance coverage works simultaneously with the ownership transfer. When the new owner buys the car, the former policy becomes invalid. The details, like the name and address of the new owner, need to match with the records as per the IRDAI to raise a claim.
If you are a car buyer, you must have two crucial documents handy before starting the transfer process.
- Registration Certificate
- Car Insurance Policy
Once these documents are in place, you must also follow the steps below to get the car transferred in your name.
- Log on to the RTO’s official website or visit its office. Download Form 28, Form 29, and Form 30. Fill in the accurate details and ensure you fill in your contact and car details.
- Submit the filled forms with the necessary documents at your nearest RTO.
- The RTO authorities will process them and issue a Clearance Certificate, which serves as evidence of the sale and the fulfilment of formalities.
- You must produce the Clearance Certificate and all the documents to your insurance provider. These documents are necessary for starting the transfer.
- If any applicable charges are related to the transfer, ensure they are paid.
- Once done with the necessary formalities and payment of applicable fees, if any, the insurance company will issue the policy in your name. The policy document may be shared via email or couriered to your address.
Transferring NCB During Car Insurance Renewal
If you, as a seller, have made no claims throughout the policy period, you qualify for a No Claim Bonus (NCB). The NCB serves as a discount on the premium during your car insurance renewal.
The bonus the insurer provides you is a percentage which increases with each consecutive year with no claims.
Therefore, a buyer must understand that the NCB belongs to the vehicle’s owner. You cannot get the NCB transferred with the ownership.
Only during the car insurance renewal can a seller opt to transfer the NCB.
