Every automobile owner knows that all vehicles plying on Indian roads need to be insured as per government regulations. It has been mandated for all prospective buyers of cars to purchase an auto insurance policy so that damages caused to the vehicle on the roads are compensated for.
Most car owners are aware of the basic car insurance policies offered by insurance providers in the country. However, not many know about the process of transferring car insurance in the event of sale or purchase of a used car. It should be noted that used car insurance can be effortlessly transferred to a new car or a new owner.
Process of used car insurance transfer
In accordance to the guidelines set by the Insurance Regulatory and Development Authority of India (IRDA), the insurance of a used car should be moved to the new owner of the vehicle with 14 days from the date on which the registration was transferred. If this is not followed, no claim will be payable to the vehicle in case it has suffered from own-damage.
The documents required for the transfer of insurance are,
- Old insurance policy
- Copy of Form 29 or the new certificate of registration
- No Objection Certificate (NOC) from the old owner of the vehicle
- A new proposal form
- Report of the inspection carried out by the insurance company
- Fee for transfer, to be paid to the insurance provider. This will be between Rs. 50 and Rs. 100.
- NCB recovery or the difference amount
Is it possible to change the insurance provider?
At the time of registration transfer, you can choose to either change the insurer or continue with the current one. With the competition in the market, various insurance providers are offering lucrative insurance policies and flexibility in coverages that can be availed of. So, this is a good time to weigh out your requirements and choose the most optimum plan for your car.
There are multiple neutral third party financial websites that offer user-friendly interfaces to compare and buy the most appropriate policy for your needs. They also provide excellent post-sale service and have dedicated teams that assist in resolving claim-related issues.
Points to note before finalising on an insurance plan
- The IDV of your car - In case your car is involved in a theft or accident where it has suffered damages, the amount that you will be compensated with depends on the Insured Declared Value (IDV) of the vehicle. So, the higher the IDV of your car, the bigger the amount you receive as payout for your claim. However, a big IDV also contributes to higher premiums.
- Discounts from insurance providers - Browse through the discounts offered by various insurers to get the most befitting policy.
- No Claim Bonus - When you purchase a used car, you will be starting with 0% NCB. However, you will be able to accumulate NCB as each year passes without claims from your end.
- AAI Membership - If you are a member of the Automobile Association of India (AAI), you will be liable for further discounts on your policy.
- Discounts based on age and profession - Some insurance providers offer age-based discounts on the premium corresponding to own-damage. Discounts are also offered based on professions, with Government employees attracting greater benefits.
- Installation of Anti-Theft devices - If your vehicle has an anti-theft device installed and the equipment is approved by the Automotive Research Association of India (ARAI), then you will be eligible for attractive discounts on the premium.
- Voluntary Deductible Discount - If you opt to pay a part of the claim amount, then you will receive an extra discount during the purchase of the policy.
- Claim Settlement Ratio and Post - Sales Service of the insurance provider - Before you make a payment for the insurance policy, you should ideally review the insurer’s market presence and their ratio of claim settlement. It is also advisable to read reviews by other customers on their after-sales service. This information gives you an insight into the reliability of the insurance company and helps you in making a prudent decision.
Impact to No Claim Bonus of used car
Many buyers of used cars are under the impression that when they get the car insurance transferred, they will also benefit from the accumulated No Claim Bonus. But this is not true. NCB is the reward given to the owner of a car for claim-free years; this amount is granted to him, not the car. So, he can retain the NCB and transfer it to the insurance of the vehicle that he would buy in the future. In effect, if a vehicle has an NCB discount on its insurance, it will not be retained in the new insurance policy after the vehicle has been registered to the new driver. This causes an increase in the premium of the new insurance policy, and the new owner of the vehicle will have to bear the differential amount.
If you are the seller of a used car, you should furnish the following documents in case you want to retain your NCB.
- A letter requesting the cancellation of the insurance policy
- A copy of the original insurance policy and the insurance certificate, i.e., Form 51
- Notice of transfer of ownership of the vehicle, i.e., Form 29
- Application for the intimation and transfer of ownership of the vehicle, i.e., Form 30
- Copy of the registration certificate booklet bearing the name of the new owner.
The transfer of a used car insurance is made comfortable through online forms at neutral financial websites. They also facilitate the car inspection process to ease your burden in the transfer of insurance. So it is advisable to make use of the online facility as much as possible.
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GST Update: GST of 18% is applicable on car insurance effective from the 1st of July, 2017