So you’re all set to buy a second-hand car for yourself, and you have already found a car model that you love and wish to have - so you find a good seller and negotiate prices. You also transfer the car registration in your name. Now there is only one more essential step to go - transferring the car insurance policy
from the previous owner to your name.
However, most people don’t know what exactly goes into a car insurance transfer process. We are here to tell you exactly what it is and what it can do for you.
What is a car insurance transfer process?
It is a process where your car insurance policy is transferred or passed on from its existing owner to another party which now holds the ownership rights to the vehicle. This transfer is mandatory as per Section 157 of the Motor Vehicles Act, and it is imperative for both parties to transfer the car insurance policy within 14 days from the date of transaction. If it is 3rd party car insurance
, then it remains active for those 14 days. If it is a comprehensive policy, then only the third-party component is considered to be automatically transferred in these 14 days.
In case the 14-day window is not adhered to, and the buyer is not able to transfer the car insurance policy to his own name within that time frame, then the automatic third-party cover transfer is annulled, and claims against it in the future would get rejected.
Why is the car insurance transfer process important?
You might be wondering, why is this transfer process so important? Let us run you through an example to help you understand it better -
Let’s say you buy your second-hand vehicle, complete the registration process, but fail to transfer the car insurance from the previous owner of the vehicle to your name. Soon after, perhaps a month or so, you meet an accident where you end up crashing into another vehicle. You need to compensate for their losses, while also raising a claim with the car insurance company. But since you haven’t transferred the car insurance policy from the previous vehicle owner, the insurance company would reject your claim. This is why you need to have the car insurance transferred to your name as the new owner of the vehicle.
If you are a seller, this process is equally important for you. In a situation where damage or accident is involved, you could be held accountable. You could, therefore, be legally obligated to compensate for the losses suffered by the third party or the damages caused to the property by the new owner of the vehicle.
If you are a seller, you also have an added reward called the No Claim Bonus. The insurance company offers the No Claim Bonus to policyholders who have not filed any claim during the previous policy year. If you have an accumulated No Claim Bonus, but fail to transfer the insurance to the new owner, you would lose out on the discount that you could get on the car insurance you would get for the other car you purchase.
So now that you know the importance of the car insurance transfer
process, you can go ahead and get started on it - whether you are a buyer or a seller. Everyone benefits from this transfer process, and it is essential to mark it done the moment a vehicle is bought or sold.