How to Transfer Car Insurance to New Owner?

The question of transfer arises when you have sold or purchased a car not directly from the manufacturer or company authorized showroom. It is obvious that all the car-related documents are to be transferred to the new owner as and when the transfer takes place. But often, the car insurance transfer gets neglected. This is because though it is an essential and mandatory document, it is not directly related to the car itself. With the secondary selling market of cars rising more than ever now, the transfer of vehicles is not limited between familiar parties. People from all walks of life living in varied geographical locations are making a deal, and hence it becomes necessary to take care of all the aspects of the transfer.

What is a car insurance transfer?

Before getting into the technicalities of car insurance transfer, online or offline, let’s have a look at what car insurance transfer is. The process of transferring the car insurance policy from the name of the seller of the car to the buyer is called car insurance transfer. It is vital to have a car insurance policy, at least a 3rd party car insurance policy, when the vehicle is being used. This makes it a very crucial aspect because non-compliance with it can lead to legal contravention, and consequences can be severe. In simple words, it is a process of withdrawal of the name of one party and substituting it with the name of another party who is now the owner of the vehicle.

Why Do You Need to Transfer Car Insurance?

You need to transfer car insurance for several reasons:

1. Change of Ownership: When selling or transferring your vehicle, the insurance policy must be updated to reflect the new owner.
2. Legal Requirement: The new owner must have valid insurance for the car, and the existing policy needs to be transferred to ensure continuous coverage.
3. Maintain Coverage: Transferring ensures that there’s no gap in insurance coverage, protecting the vehicle and its new owner from potential risks or liabilities.
4. Policy Continuity: The transfer allows the new owner to retain the same benefits, coverage, and claim history as the previous policyholder.

Is there any time limit within which such transfer is to be made?

According to the regulations, it is mandatory for car insurance transfer online or offline within 14 days of the date of transfer of a vehicle. If the previous owner had a third-party policy, the same should remain active for a period of 14 days from the date of transfer. However, if the previous owner had a comprehensive policy, then only the third-party liability portion shall remain active for a period of 14 days from the date of transfer if the transfer of policy has yet not taken place. If the seller fails to transfer the car insurance to the buyer within 14 days, the third-party liability shall stand withdrawn after 14 days automatically. After this, no claims shall be entertained under this policy.

What happens if the insurance policy is not transferred?

If the car insurance policy is not transferred, the insurance company shall not accept any claims made by the new buyer; this is because the vehicle is registered in the name of the new buyer; hence registration certificate is in his name, and the policy is in the name of the old owner. As both the documents don’t carry the same name, the claim shall be denied. It is essential to transfer the policy from the standpoint of the seller also as the seller shall be held liable to pay the damages if an accident occurs and third-party damages are to be paid. It is important to note that when a transfer takes place, the ‘No Claim Bonus’ accumulated on the policy shall not be transferred. It remains with the old policyholder only. Also, ‘No Claim Bonus’ shall be settled as against the premium of own damage insurance only. As the policyholder, it is imperative to know how to claim car insurance to enable quick remediation of claims when required.

How Can You Transfer the Insurance Policy?

1. Inform Your Insurance Provider: Notify your insurance company about the change in ownership and your intention to transfer the policy to the new owner.
2. Provide Required Documents: Submit the necessary documents, such as the vehicle's Registration Certificate (RC), the Sale Agreement, proof of the new owner’s identity, and any other required paperwork.
3. Complete Transfer Form: Fill out the policy transfer form provided by the insurance company with details about the new owner and vehicle.
4. Pay Transfer Fee: Some insurers may charge a fee for transferring the policy. Ensure you pay any applicable fees.
5. Policy Update: After processing the request, the insurer will update the policy to reflect the new owner’s details and provide a new copy of the policy.
6. Transfer of No Claim Bonus (NCB): If applicable, the No Claim Bonus (NCB) may also be transferred to the new owner, depending on the insurer's terms.
7. Final Verification: Once the transfer is complete, verify that the new owner’s name appears on the policy, and ensure they receive coverage immediately.

Documents Required to Transfer Car Insurance to New Owner

1. New registration certificate
2. Car insurance
3. Original invoice of car
4. NOC from financer
5. Road tax receipts

RTO Documents Required for Car Ownership Transfer

1. Original Registration Certificate (RC): The car's original RC document showing the current owner's details.
2. Form 29 (Application for Transfer of Ownership): A signed form by the seller stating the intent to transfer ownership.
3. Form 30 (Notice of Transfer of Ownership): A signed form by both the seller and the buyer for the ownership transfer process.
4. Identity Proof: Valid identity proof of the buyer, such as Aadhaar card, passport, or voter ID.
5. Address Proof: Proof of address of the buyer (e.g., utility bills, passport, or ration card).
6. Pollution Under Control (PUC) Certificate: Valid PUC certificate for the vehicle, ensuring compliance with environmental norms.
7. Insurance Policy: Proof of valid car insurance in the name of the new owner.
8. Sale Agreement: A copy of the sale agreement signed by both parties.
9. No Objection Certificate (NOC): If the car has an existing loan, an NOC from the financing bank or institution is required.
10. Customs Clearance Certificate: For imported vehicles, a customs clearance certificate is necessary.
11. Passport-sized Photographs: Photographs of the buyer (as per RTO requirements).

Reasons Why Transfer of Car Insurance is Required

Here are the key reasons why the transfer of car insurance is required:

1. Change of Ownership: When a vehicle is sold or transferred, the insurance policy must be updated to reflect the new owner's details.
2. Legal Requirement: Insurance is mandatory for all vehicles. The new owner must have valid insurance for the car to be roadworthy and comply with legal requirements.
3. Continuous Coverage: Transferring the policy ensures there’s no lapse in coverage, keeping the car protected against accidents, theft, or damages.
4. Retain No Claim Bonus (NCB): The new owner can benefit from the No Claim Bonus (NCB), if applicable, when the insurance policy is transferred.
5. Avoid Policy Lapse: If the policy isn’t transferred, it might become invalid, leaving the vehicle unprotected.
6. Smooth Ownership Transition: The transfer of insurance makes the transition smoother for the new owner, ensuring they don’t have to buy a new policy immediately.
7. Policy Continuity: The new owner can maintain the same coverage, terms, and conditions without having to go through the process of purchasing a new insurance policy.

Things to Keep in Mind While Transferring Car Insurance

1. Policy Terms & Conditions: Before transferring, read through the existing policy to understand what’s covered and check for any add-ons like roadside assistance or zero depreciation.
2. Required Documents: Make sure you have the vehicle’s RC, proof of identity and address for both the buyer and seller, and a signed sale agreement.
3. No Claim Bonus (NCB): If the seller has a No Claim Bonus, confirm that it can be transferred to the new owner for premium savings.
4. Premium Payment: Ensure the policy’s premium is paid and up to date, as an outstanding payment might delay the transfer process.
5. Insurance Provider’s Policy: Check with the insurance provider to confirm if the transfer is allowed and if there are any charges or conditions for the transfer.
6. Vehicle Condition: Verify that the vehicle meets the insurance company’s requirements and is in good condition for policy transfer.
7. Proof of Sale: Both the buyer and seller must sign a sale agreement or invoice as proof of the transaction.
8. Update Details on Policy: Ensure the new owner’s details are updated correctly on the policy to avoid issues when making future claims.
9. Additional Coverage Needs: The new owner should assess if they need any additional coverage or changes, such as extending the policy with add-ons.

Who is Responsible for the Transfer of Car Insurance Policy?

The responsibility for transferring a car insurance policy lies with both the seller and the buyer, but primarily the seller. The seller must initiate the process by informing the insurance provider about the change in ownership and providing necessary documents, such as the vehicle's Registration Certificate (RC) and a sale agreement. The buyer, on the other hand, needs to provide their identity and address proof, along with any other details required by the insurer. The buyer should also ensure that the insurance coverage is transferred correctly and the policy is updated with their details. While the insurance company handles the paperwork, both parties must cooperate to ensure a smooth transfer process. Ultimately, the insurance provider may charge a fee or require additional documents, but it is the seller's responsibility to kickstart the transfer and the buyer's to ensure the coverage remains valid after the change of ownership.

Conclusion

Transferring car insurance to a new owner is a relatively straightforward process that requires both the seller and the buyer to work together. It's crucial to complete the necessary paperwork and ensure all required documents are provided to avoid any coverage lapses. The insurance company will handle the transfer, ensuring that the new owner continues to have valid coverage without interruption.

Frequently Asked Questions

Can I transfer my insurance to a new car during the policy term?

You can transfer the insurance to a new car during the policy term provided your policy provider provides that facility and specific changes required are made in the policy and premium.

Can I transfer my insurance to a new car along with the existing ‘No Claim Bonus’ benefit?

‘No Claim Bonus’ shall never pass on the transfer of policy and is retained by the transferor only. Hence you can continue to avail the benefit of your ‘No Claim Bonus.’

 “I am a seller of the car. Why shall I be interested in transferring the car insurance?” asks Manish

As a seller, you can be benefitted by the car insurance transfer, online or offline, in ways that, in case of any third-party liability arising after the transfer, you shall no more be held liable to pay those. Also, you can utilize your no claim bonus in your new car insurance policy and not miss any benefit of payment of lower premium.

Can I transfer third-party car insurance?

No, third-party car insurance cannot be transferred to a new owner. The new owner will need to buy their own third-party car insurance.

What is the cost of car insurance transfer?

The cost for transferring car insurance typically involves a small administrative fee. However, the exact fee varies by insurance provider. Contact your insurer for specific details.

Who requires NOC?

A No Objection Certificate (NOC) is required if the vehicle is under a loan or financing. It needs to be obtained from the bank or financial institution that holds the loan before transferring ownership.

Can I transfer my NCB to the new owner of my car?

Yes, the No Claim Bonus (NCB) can be transferred to the new owner if the new owner agrees and the transfer is processed through the insurance company.

Can I transfer my car's RC without transferring vehicle insurance?

Technically, you can transfer the Registration Certificate (RC) without transferring the vehicle insurance, but it's not advisable. The insurance should be updated to reflect the new owner's details to ensure valid coverage.

How much time does it take for an RC to be transferred?

The RC transfer process usually takes about 7 to 15 working days, depending on the Regional Transport Office (RTO) and the submission of necessary documents.

How much fee do I have to pay to transfer the ownership of my car?

The fee for transferring ownership varies by state and RTO but generally ranges between ?500 to ?2,000. Additional charges may apply depending on the documentation and NOC requirement. *Standard T&C Apply *Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms and conditions, please read the sales brochure/policy wording carefully before concluding a sale.