The easy availability of auto finance and the availability of a wide range of attractive cars have ensured that most car owners keep upgrading their vehicles after a few years. If you are also thinking of buying a new car for getting better features or fuel efficiency, then we have some useful advice for you. Along with buying the new car, you would also need to sell your existing car. While this process of selling the old car is not very complicated, there are certain important points that you have to keep in mind while completing the sale. Apart from just finding a buyer for the vehicle and getting it registered in his name, you also need to transfer vehicle insurance policy.
No Claims Bonus
If you have been driving your car for a few years and have not made any claims from your car insurance policy, then the insurance company will reward you for being a safe driver. This reward is known as “No Claims Bonus”. This is expressed as a percentage and increases for every claim free year.
The policyholder can redeem this no claims bonus as a discount on the premium payable. For example, if your no claims bonus entitlement is 25%, and the premium payable for the year is Rs. 20,000, then ultimately you will end up paying only Rs. 15,000. If you don’t make a claim in the next year also, then your bonus entitlement will go up to 30%, and consequently, you will get a higher discount while paying the premium.
Since the No claims bonus is given to the owner of the vehicle for not making a claim and not attached to the vehicle, it cannot be transferred to anyone else. Therefore, while initiating the transfer of the vehicle insurance to the new buyer, do not forget to inform the insurance company of your decision to do so, and apply for a no claims bonus certificate, which will help you to retain the benefits. You can later produce this certificate to the company that will be insuring your new car and become entitled to the same benefits from that company.
When do You need to Transfer Car Insurance?
As per the rules laid down by the insurance regulator, a vehicle insurance is linked to a particular car, and not to its owner. Hence, when a car is sold to a new owner, the insurance is also deemed to have been transferred along with the car. The new owner has 14 days to inform the insurance company about the ownership transfer, and getting the insurance transferred to his name. He must do this immediately. Otherwise, in case accidents or damages happen to the car during this interim period, he will not get a claim, since the owner’s name on the registration certificate and the insurance policy document will not match.
Must Read: A Guide To Choose Your Car Insurance Policy!
It is highly recommended that the process of transfer of car insurance should be initiated as soon as the application for the ownership transfer of the car is made to the registration authorities. This ensures that the policy will get transferred by the time the vehicle transfer is officially complete.
The process of transferring vehicle insurance is quite simple, and just requires the production of the necessary documents and the signing of a few papers.
- The certificate of the existing policy
- A no objection certificate from the erstwhile owner of the car
- A properly filled up application form
- The new registration certificate or form 29
- The inspection report of the car (this inspection is carried out by authorized personnel of the insurance company).
Along with these documents, the transfer fee and the premium amount (after adjusting for any no claims bonus) have to be paid.
The Insurance Transfer Process
The car insurance transfer process can be initiated by the new owner on his own, or he can also contact his insurance agent to get it done. He needs to produce the necessary documents mentioned above, and apply to the insurance company for a change in name. At this stage, some insurance companies also allow the new owner to request for some changes in the policy features.
One thing to remember is that if the application for change in name is not filed within the specified time period, then the insurance policy will become void and no refund or discount will be given by the insurance company.
What Happens if The Transfer is Incomplete?
As we have mentioned earlier, the new owner will not get any claims from the insurance company till the time the transfer of vehicle insurance is complete. Thus, it will be extremely risky for the new buyer to even drive the car on the road during this period, even if the ownership transfer has been completed. It is the duty of the new buyer to get the vehicle transfer completed soon, and the previous owner should also cooperate with him by providing the necessary documents to him and signing the papers as soon as possible.
So the next time you sell your car, don’t forget to get the vehicle insurance transferred. This simple step will enable you keep enjoying the benefits that you have earned from the insurance company for being a safe and responsible driver for so many years.