In a South Delhi instance, recently, a person purchased a used car but failed to complete the transfer of name procedure for the insurance policy. The State Redressal of Consumer Complaint Forum later refused him insurance cover because on accident date the name of the vehicle’s previous owner was on the policy.
Something like this can easily happen to you too. So, take stock of the situation before it becomes too late. You should ensure that the existing insurance policy has been transferred to your name or you must buy second hand car insurance if there is no ongoing policy.
In the above case, the complainant purchased his used Maruti Esteem car fully insured for the period January 1 - December 31 for the year 2006. On August 21 of the same year, an accident occurred in which this vehicle was involved. This resident of South Delhi filed his claim for INR 45,198.
Sadly, the insurer, in this case, failed to entertain the claim since on the accident date the transfer of the policy name from the previous owner has yet not occurred. So, according to an insurance company, the claimant cannot have any insurable interest in this case. After the repudiation of the claim, the person moved the consumer forum on the district level alleging a service deficiency.
This District Forum, however, found the insurer deficient and gave it directions to pay the claimant required insurance amounts combined with 9% annual interest. Besides, it also directed the insurer to pay INR 20,000 as compensation amount along with INR 5000 as costs. Following this, the insurance company also appealed to the State Commission and contended that the District Forum order contains palpable illegality.
According to the company, the District Forum has relied on a judgment given in the year 2007. This particular judgment held that benefits under any in-force insurance policy would stand transferred automatically to new purchasers.
Here the insurer also added that the District Forum has not considered subsequent judgment in a 2010 case. This clearly held that in cases where car insurance remains in the name of the previous owner on the accident date, no claim will be granted and the new owner needs to apply for a change of policyholder’s name within 14 days of buying the car.
This written application for the transfer of name is to be submitted within 14 days from the transfer date to the insurance company for ensuring the necessary changes. Also, according to the ruling of the apex court, the deemed insurance policy transfer under the Motor Vehicles Act (MVA) Section 157 doesn't apply in other types of risks.
It is especially true when the deemed insurance policy transfer remains restricted to the risks involving third parties.
Naturally, the claimant failed to get the claim amounts with additional legal expenses to bear. However, this case offers a valuable lesson to all those people who have purchased a second-hand in-use vehicle recently or are planning to do so.
If you buy a used car, make sure to give a request for change of name in the existing policy within 14 days of buying the car. Failing to do so will make you ineligible to raise any claims with the motor insurer during an emergency as the policy would be on previous car owner’s name. Besides, if your used car did come with car insurance, you must buy a second hand car insurance policy to stay covered from any unforeseen emergencies.
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