Everything About Insurance For Second-hand Car!
Published On Nov 26, 2019 5:30 AM By InsuranceDekho
Bought a second hand car and wondering what you need to get it insured? Read this article to find out.
Buying a second-hand car saves a lot of money since they are priced almost 50% lower than new cars. However, you would still need to have valid car insurance because it provides financial support to your vehicle as well as cover all damages, injuries, disabilities or death caused to oneself and the third party. Moreover, according to the Indian Motor Tariff, 2002, every car owner driving on the streets of India, must hold a car insurance policy that would cover any damages caused to some third party due to accidents caused by your car. So ensuring your car is mandatory, no matter whether it is new or a used one.
Why Insuring Your Second-Hand Car is Necessary?
Getting a car insured is a legal compulsion in India. According to the Act stated above, it is mandatory to have a third party car insurance policy. However, it provides less coverage than a comprehensive car insurance policy. A third party car insurance does not cover the damages caused to one’s own vehicle. Also, any incidents relating to the death of the driver or the passengers or their bodily injuries are not covered by a third party car insurance policy. The comprehensive car insurance policy provides the maximum coverage that you can avail from a car insurance policy. This policy insures the policyholder against the financial loss in events like total loss or theft of the car or damages caused due to human or natural calamities.
Benefits of Getting Your Secondhand Car Insured
An insurance cover helps you mitigate the following car related risks:
Natural calamities: Damage caused due to natural calamities such as storm, flood, earthquake, etc. are covered by the comprehensive car insurance policy.
Theft of Insured Car: Having a comprehensive car insurance policy provides complete protection against theft of the car. By setting a correct Insured Declared Value (IDV), the policyholder can receive the right amount from the car insurance company.
Man-made calamities: Any damage caused due to man-made disasters such as vandalism, fire, terrorist activities like explosion, lightning, or self-ignition, etc are covered under this car insurance policy.
Road Accidents: A comprehensive car insurance policy covers damages, injuries or death caused to the car owner and his or her vehicle due to road accidents.
Car Transit: Any kind of damage caused in transit by rail, waterway, road, elevator, lift, and the road is also covered by a comprehensive car insurance company.
Things to Know About a Car Insurance for a Used Car
Before you consider getting your second-hand car insured, here are certain points you need to keep in mind.
- The IDV of a used car is lower than a new one. Therefore, the premium amount associated with a car insurance policy for an old car is definitely lower.
- Since old cars generally don’t come with security or anti-theft devices, they are targeted by thieves more than new vehicles. So you either need to be careful in this regard or install the required security devices. It would be recommended to get an insurance policy that covers events of theft.
- It is much cheaper to repair an old or used car.
- However, a used vehicle would be more prone to situations like breakdowns or total loss. This means that the total premium amount of your insurance policy would be much higher as compared to a new car.
Things To Keep In Mind For Second-hand Car Insurance
Buying a car is a big deal, especially if you are buying a second-hand car. It follows an unending trail of registrations, paperwork, insurance troubles and transfers. Given below are some factors that you need to consider before insuring a second-hand car.
Transfer the Car Insurance Policy Or Buy A New One
The car insurance policy has to be transferred in the name of the new owner. In most of cases, it becomes difficult to change the features and type of car insurance policy before the term of the policy ends. However, on request, the car insurance company may provide the option for endorsements.
If you do not wish to transfer the old plan to your name, you can get a new car insurance policy for your secondhand car.
Check the Previous Policy Claim History
While buying a second-hand car, check and confirm the previous claim history from your previous owner and also cross-check it with the car insurance company. Also, consider verifying all the details provided by the previous owner. You only need to provide the policy number to the car insurance company to know the information related to the claim history of the car.
Get Car Inspection Done
The insurance company will perform a thorough inspection of your second-hand car to check for its condition, age, amount of damages done (if any), the total distance covered by the vehicle, whether there is the easy availability of the vehicle’s spare parts and whether there are any safety devices installed.
How Can I Get the Existing Car Insurance Policy Transferred To My Name?
Following is the procedure which you can follow to get the existing insurance policy of your secondhand car transferred from the first owner to your name:
Step 1: Fill up a fresh proposal form along with furnishing evidence of the sale, such as transfer of RC (registration Certificate), Forms 29 and 30 which are duly signed by the first or previous owner, copy of the previous insurance policy and transfer fee receipt. After receiving these documents, the insurance company will pass an endorsement of the transfer.
Step 2: Submit a copy of the new RC issued by the RTO (Regional Transport Office) to your insurance company so as to make the process smoother as well as to help you to resolve any issues at the time of raising a claim.
Step 3: If in any case the change of ownership is not reflected in the new copy of your vehicle’s RC even after you got the insurance policy transferred in your name, or you have failed to submit the proof of the same to your insurance company, then at the time of making a claim, you have to submit the proof of transfer of the RC to the insurance company so as to receive the desired reimbursement.
Step 4: If the process of transferring the car insurance policy is still under process, your claim request would, however, not be rejected. But you would receive the claim amount only after you have submitted proof of transferring the RC to your insurance company.
Are All Types of Car Insurance Policies Transferable?
It is to be noted that only the third party portion of the car insurance policy gets transferred from the previous owner to the new owner. To get the own damage or comprehensive section of the policy transferred, the new owner of the car must make an application to the insurance company. However, in order to do that the new car owner must have the insurance policy of the vehicle registered under his or her name.
Car Insurance Policy Transfer Deadline
In order to transfer the car insurance policy, it is required that the ownership of the car gets transferred to the new owner. After you have completed all the documentation and inspection procedures and got the ownership of your car transferred to you, you need to transfer the car insurance policy from your previous owner to yourself within the first 14 days of transferring the car ownership.
If the new owner fails to transfer the car’s insurance policy in his/her name within the threshold period of 14 days, then any damages caused to the owner or to the third party due to accidents met by his/her car would not be covered by the insurance company. So make sure you do that on an urgent basis to continue getting al the benefits enjoyed by your previous car owner.
Documents Required for Ownership Transfer of Car and its Insurance Policy
Given below are some of the documents that are required at the time of transferring the ownership of the car from your previous owner to the new owner:
- Application Form 29, 30 (with purchaser and seller signature)
- Original Registration Certificate (RC)
- Address Proof of purchaser
- An affidavit from the purchaser and the seller related to the transfer of ownership
- No Objection Certificate from the concerned RTO/ AETC in case of Transport Vehicles
- Appropriate fee
- Valid Insurance Certificate
After the ownership of the vehicle is transferred, the owner of the second-hand car needs to contact the existing car insurance company. It will ask for the following documents from the owner.
- Old Insurance Certificate
- Original Registration Certificate (RC) along with transferee name (new owner or buyer)
- Application for transfer of ownership
- The required fee, if any.
After the documentation is done and the application fee is paid, and the required documentation procedures fulfilled, the car insurance company transfers the insurance policy in the name of the new owner.
People often fail to take care while transferring the car insurance policy and do not go through all the terms and conditions thoroughly. One needs to complete all the documentation procedures proactively within the specified time frame, before getting yourself into legal troubles or damages caused in the event of an accident. It is also recommended that a car owner must go through various car insurance to arrive at the best decision.
In an overview, the above-mentioned points should be able to guide you in getting your second-hand car insured. When purchasing car insurance, make sure to do it online from a trusted website like InsuranceDekho. With a few clicks, you can compare different car insurance companies, the quotes they offer and their network of cashless garages. Additionally, keep in mind when purchasing car insurance that there are three main types of car insurance in India. The first is third party car insurance which provides compensation for third party liabilities in case of a mishap. The second is the standalone own-damage car insurance, this covers the cost of own-damages in an accident. The third is the Comprehensive Cover, this compensates for both third-party liabilities and own-damage under a single premium. You can also purchase add-on covers such as the zero depreciation cover, the return to invoice cover, the consumables cover, the passenger cover and the roadside assistance cover. It is also important to make an informed choice when purchasing insurance online, hence, we have put together a number of articles on car insurance to help build your basic knowledge. Click here to read them.
For further reading:
How To Buy Insurance For Used Car?
Disclaimer: This article is issued in general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.
Source: Acko General Insurance, Iffco Tokio General Insurance