How To Transfer Car Insurance Policy?

When transferring car insurance to a new owner, it is imperative that you keep in mind that all the documentation and insurance has been transferred to the new car owner's name to ensure no problem in the future. If you are a seller, read on to learn how to transfer your car insurance coverage to the new owner.

Understanding Car Insurance Policy Transfer

Whether you are selling or buying a car, one of the most significant aspects to remember is to transfer the car insurance policy. If the car insurance has not been transferred yet, you are not allowed to use the car on the road. So, understanding the transfer of car insurance is necessary. This entire process is beyond passing the key and the vehicle. Like any other document, such as an RC (registration number), transferring the insurance copy is a part of car acquisition.

While you are purchasing a second-hand car, the transfer of car insurance in your name effectively prevents you from theft, legal compliance, and on-road mishaps. On the other hand, the seller of the car has no use for the car insurance as the car has already been transferred to the buyer’s name. There is a provision in the Motor Vehicle Act that the car insurance must be transferred within 14 days of procurement.

Many car owners are even unaware of the fact that car insurance can be transferred. That’s why they face the consequences, such as claim rejection and penalties. The name on the registration certificate and insurance policy should be the same as per the insurance T&C (terms and conditions). To ensure all these things, you have to understand the transfer of the car insurance policy.

Reasons Why Transfer of Car Insurance is Required

Transferring car insurance is obligatory for the buyer as well as the seller. But why has this become a necessity? There are several reasons behind it. Let’s discuss some of the most valid reasons:

• Legal Requirements: As a car owner in India, you have to comply with the rules of MVA (Motor Vehicle Act). If it’s found that there is a complete mismatch in the name of car ownership and insurance policy, you will be penalised or even suspension of your driving license according to traffic laws. If you are a new owner, it’s your responsibility to adhere to legal compliance appropriately.
• Claim Rejection: By not transferring the car insurance, you can pay a hefty price. If the previous owner has comprehensive or third-party insurance, you will not get the benefits of the insurance. Suppose any accident occurs while driving the car; the insurance company will not pay any money for the damages to the vehicle or the injured person. The insurance company verifies the claim and outright rejects it as soon as the mismatch.
• Cost Savings: Another relevant reason in this respect is cost savings. When you buy a second-hand car, you need not buy new insurance until the ongoing insurance has expired. Being a new owner of the car, you will get this advantage that you can’t miss. This adds a value-added advantage to the car owners. Without taking the hassle, you save your hard-earned money.
• Retain No Claim Bonus: A no-claim bonus is an amazing thing in insurance that increases your claim range subsequently. If the previous owner didn’t claim anything, then it was added to the car insurance. It is like the prize of safe driving. The no-claim bonus will give you a decent discount on the upcoming premium of the insurance. You must have the NCB certificate for that. As long as you don’t transfer the car insurance, you will not get the certificate.
• Customisation Benefit: The continuation of the existing car insurance gives you the option of customisation. This customisation includes opting for different plans in the same old insurance. All of a sudden, it is not required to buy brand new insurance. Any of the car owners must acknowledge this severe benefit. They just transfer the car insurance by abiding by the relevant law.
• Streamline the Process: Purchasing new insurance is often a hectic task. Many of the new second-hand owners are reluctant to do so. That’s why choosing the transfer option is comparatively easier, and it streamlines the entire process. In this modern age, people are less interested in going for the time-consuming option.
• Avoiding Future Disputes: The scope of future disputes between owner and seller if the car insurance is on time. The confusion of the claim process can lead to disputes. Appropriate car transfer insurance is the only solution to the problem.

Things to Keep in Mind While Transferring Car Insurance

Certain things every new policy applicant must keep in mind during the transfer of car insurance. Take a look at the following things before transferring the car insurance:

• Inform the Insurance Company: Notifying the concerned insurance company is a must regarding the transfer of the car insurance. You have to inform them of the name of the new owner and details (name, address, and other things). Communication ensures that you are in touch with the insurance provider during the process of transferring.
• Timely Initiation: The car owners should ensure that the intimation for the transfer of the car insurance starts as soon as possible. As per the MVA, the process must begin within 14 days of purchase. It is very important to have an uninterrupted policy continuation.
• Produce Required Document: The submission of all needed documents like Form 28 (No Objection Certificate), Form 29 and 30 (for sale transfer), and the RC of the previous owner is required. Cross-checking these documents with the insurance provider is part of the process.
• Associated Costs: You must enquire the respective insurance company about the relevant fee for transferring the car insurance. Generally, this fee is nominal, and some companies even do this transfer free of charge.
• Submit The Proposal Form: The insurance company may ask you to provide the sale deed of the car ownership. Additionally, you have to fill out the proposal form.
• Premium Payments: The clarity of payment dues the car owner must inform the insurance enterprise.This will avoid any future complications.

How To Transfer Car Insurance Policy From One Person To A New Owner in India?

Vehicle insurance name transfer is a critical process. According to the transportation department's guidelines, it is the seller's responsibility to transfer the car insurance policy to the new owner. You must ensure that the insurance has been transferred to the new owner’s name buyer. 

The following are the actions that must be taken in order to transfer a car insurance policy to a new owner:

STEP 1- Check that you have all of the documentation needed to begin the vehicle insurance transfer process.

STEP 2 - As soon as the ownership transfer process is complete, apply for the transfer of the car insurance policy within the time frame specified.

STEP 3 - Select the comprehensive car insurance plan as well as any optional add-on coverage that you believe is required.

STEP 4 - To begin the transfer of your car insurance policy, provide all essential documents, including forms 29, 30, and the Sale deed.

STEP 5 - the insurance company will send a surveyor to inspect the car.

STEP 6 - The policy will be moved to the new owner's name once the assessment is finished.

What Documents Are Required To Transfer A Car Insurance Policy?

It is critical to have specific paperwork in hand when transferring your car insurance policy to a new owner in order to securely transfer the policy. The following are the documents you will require:

• The original Registration Certificate for the vehicle (RC)
• RTO receipt for Forms 28, 29, and 30 signed by both the buyer and seller as proof of transaction.
• Certificate of No Objection from the former owner of the vehicle.
• Proof of the buyer's address
• Photographs of the buyer and seller in passport size.
• Documentation for an existing insurance coverage.
• The insurance company provided an inspection report on the vehicle.

No Claim Bonus (NCB) Certificate in Car Insurance Transfer Process

To transfer the No Claim Bonus (NCB) certificate in car insurance, follow these steps:

• Contact your previous insurer and request an NCB certificate.
• Provide necessary information, such as policy details and vehicle registration number.
• Submit required documents, such as the previous policy copy and a transfer form.
• Your previous insurer will issue the NCB certificate, indicating the accumulated bonus.
• Provide the NCB certificate to the new insurer when purchasing a car insurance policy.

Note: NCB is transferable only when you switch insurers during car insurance policy renewal, not during the policy term.

Documents Needed for NCB Retention Letter

To obtain an NCB retention letter, you will generally need the following documents:

• Valid identification proof.
• Previous insurance policy document.
• Proof of sale agreement (if the vehicle has been sold).
• Vehicle's registration certificate and transfer forms (if applicable).
• No Claim Bonus (NCB) certificate issued by the previous insurer.
• Ensure that you have these documents ready and submit them to your insurer to obtain the NCB retention letter.

Can NCB Also Be Transferred to A New Owner? 

When you are transferring your car’s ownership to a new person, you also have an option to transfer the car insurance policy to the new owner after making a request to your insurer and by paying a transfer fee. However, your no claim bonus (NCB) does not get transferred along with the car insurance. This is because no claim bonus is not offered to the car but the policyholder. It is a discount offered to the policyholder for being a responsible driver. Your car insurance policy is only used as a reference to device your NCB. 

NCB can be transferred only when you are switching insurers from one company to another during renewal. At this time you will have to request your old insurer to provide you with an NCB certificate which you will have to submit to your new insurer.

What Happens If Car Insurance Is Not Transferred?

If you are buying a pre-owned car, car insurance is mandatory. If the car’s previous owner had a car insurance, it is better to get it transferred to your name at the earliest instant to avoid complications in the future.

Legal Implications

Driving a car without insurance is punishable under the Indian Motor Vehicles Act, 1988. Hence, if you buy a pre-owned car that already has car insurance, not transferring the existing insurance to your name can invite hefty fines and even imprisonment 

Claim Rejections By Insurer

Invalid Claims: Having improper insurance ownership leads to claim rejections. If the car insurance is not transferred to it’s new owner’s name, and an accident occurs, the insurers will not accept any insurance claim pleas, thus rendering the owner to pay for damages from their pocket.

Financial liability: When you don’t own car insurance, in the event of theft or an accident, the financial burden of repairs falls on the new owner’s shoulders. Hence, it is important to transfer the car insurance to the new owner’s name. Insurers may deem the policy invalid if the car insurance transfer process is not completed within a stipulated time frame, typically within 14 days of the sale.

Loss of Bonus 

Non transferable NCB: The ownership of car insurance can be transferred, however, NCB cannot. Hence, if you have just acquired a pre-owned car with insurance, know that you cannot be eligible to avail of NCB on the old insurance as per the policies set by insurers.

Conclusion

Transferring your car’s ownership to another person is simple if you follow the steps properly after understanding the process. Ensure you and the new buyer have all the information handy and that you are aware of all the certificates required. Note that your no claim bonus does not move to the new owner if after your car insurance policy has been transferred as NCB is awarded to the person not the car or is not within the car insurance plan.

Frequently Asked Questions (FAQs)

Q1. Can I transfer my car insurance to the new owner when I sell my car?

Ans. Yes, you can transfer your car insurance to the new owner when you sell your car. You will have to write a letter to your insurer stating the need to transfer along with a transfer fee and documents like NOC or no objection certificate from the old owner, car registration certificate, your driving licence and any other documents required by the insurance company.

Q2. Is NCB transferable to the new owner of my old car?

Ans.  No, NCB is non transferable as it is awarded to the car owner and is not within the car insurance plan or for the car.

Q3. Can we change the name in car insurance? 

Ans. Yes, the name of the owner in a car insurance policy document can be changed. You will have to apply for a name change to the insurer along with a no objection certificate (NOC) from the last owner, an inspection report and the vehicle registration certificate or RC. You may be required to submit additional documents in case there is any question asked by the insurance company. After this the ownership will be transferred to the new owner.

Q4. Can NCB drop to zero?

Ans. Yes, your no claim bonus or NCB can drop to zero in two situations - One when you raise a claim without NCB protect cover and two when your car insurance policy hasn’t been renewed in time. You should avoid this by not raising multiple claims for minor damage or repair and by renewing your car insurance in time - within 90 days of policy expiry.

Q5. Is it beneficial to try keeping the NCB intact?

Ans. Yes, keeping your NCB intact helps you in getting no claim bonus discount of up to 50% during policy renewal. This discount varies insurer to insurer.

Also read 

What Can Happen if You Ignore the Transfer of Insurance for a Used Car?

Car Insurance Guide for Second Hand Car