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      How to Transfer Car Insurance Policy?

      An integral part of selling a car for both the buyer and the seller is ensuring a successful car insurance transfer to the new owner. But sadly, most people have no clarity about transferring the ongoing car insurance policy. Read further to know how to transfer car insurance to the new vehicle owner.

      Read more

      Why Do You Need to Transfer Car Insurance?

      As you know, four-wheeler insurance is purchased to financially secure a car from unforeseen risks like a road accident. If you no longer own the vehicle, there is no point in keeping the motor insurance policy with you.

      Thus, when you sell your car, you must ensure the vehicle's new owner gets your four-wheeler insurance policy transferred to his/ her name. If you are the one buying a second-hand car, make sure to get the ongoing motor insurance policy transferred to your name.

      Besides, there are two reasons why you should transfer your car policy:

      1. To Avoid Future Liabilities

        If you have purchased a second-hand car, it is important to get the existing insurance policy transferred to your name to avoid any future liabilities. If you have an accident with your second-hand car, resulting in third-party liabilities, you won't be able to file a third-party claim as you did not get the policy transferred to your name. As a result, you will have to pay off your third-party liabilities on your own.

        Similarly, if you sell your car to someone, you must transfer the existing vehicle insurance policy to the car's new owner.. If you don't, you may be liable to pay for the third-party accidental liabilities caused by the car's new owner, as you are still the policyholder of the sold car's insurance policy.

      2. To Retain No Claim Bonus

        For every claim-free policy year, you earn a No Claim Bonus that helps you earn a discount on your car insurance renewal premium. When you sell your car, you need to get the earned NCB transferred to your new car so that a discount can be availed on the renewal premium of the new car policy.
        To do so, you need to obtain the NCB certificate from your motor insurance company after informing them about the sale of the car. The NCB certificate cannot be obtained unless you transfer the ongoing motor insurance policy to the new owner of the vehicle.

      How to Transfer Car Insurance from One Person to Another In India?

      The four-wheeler insurance transfer process works in sync with the transfer of ownership. Once the new owner buys the car, the previous owner's policy does not remain valid.

      This is because the name and address of the new owner on both the registration certificate and insurance documents have to match according to the IRDAI to raise a claim. The same name is not possible if the insured car has been sold to another person.

      Besides, an insurance name transfer is required because, in case of an emergency, it comes in handy for the new owner to recover the cost of damages. In addition, failure to insure ones vehicle can result in denial of a claim.

      You May Also Read: Used Car Insurance

      Documents Required to Transfer Car Insurance to New Owner

      To transfer car insurance to new owner, you need to raise a transfer request with the motor insurance provider. Along with a transfer fee, the following documents are required to be submitted for car insurance transfer:

      • The new copy of the registration certificate
      • Form 29
      • Form 30
      • Old car insurance policy documents
      • No Objection Clause (NOC) from the previous policyholder
      • New application form
      • Inspection Report (to be carried out by the insurance company)
      • No Claims Bonus difference amount

      No Claims Bonus in Car Insurance Transfer

      In the process of selling a car, the previous owner transfers the registration and insurance details to the seller. However, there is an important exception to the car insurance transfer process, i.e. the No Claims Bonus (NCB).

      The No Claims Bonus is a 'reward' from insurance providers to safe drivers for not making any claims during their policy year. The NCB percentage can be used to reduce your car insurance renewal premium for subsequent years. In fact, the greater the number of claim-free years, the more the benefit/discount accumulated. However, an earned NCB cannot be transferred to the new owner. It can only be transferred from your old car to your new car.

      When an insurance policy is transferred to a new car, the NCB can be retained by producing an NCB retention letter to their new insurer. The letter makes the previous policyholder eligible for an NCB discount on the insurance premium of the new car.

      You May Also Read: No Claim Bonus (NCB) in Car Insurance

      Documents Required for NCB Retention Letter

      The insurer will ask for the following documents to issue an NCB retention letter:

      • Request letter for policy cancellation
      • Original policy copy and certificate of insurance (also called Form 51)
      • Form 29 (notice of transfer of ownership of a motor vehicle)
      • Form 30 (application for intimation and transfer of ownership of a motor vehicle)
      • Photocopy of registration certificate book with the name of the new owner
      • Proof of delivery of the car to the new owner

      Can No Claim Bonus Be Transferred to the New Car Owner?

      No. The No Claim Bonus reward cannot be transferred to the new owner of the insured car. While car insurance can be transferred to the new owner, the NCB can never be transferred to any other party. It can only be transferred to the new car of the same owner.

      For instance, if a car owner wants to sell his/her car after the fourth policy year and has never filed a claim during the policy period, he/she is entitled to a 45 per cent NCB discount on the renewal premium of his/her new four-wheeler.

      Suppose he/she buys a new car for which the policy premium is Rs. 25,000 and the damage component is Rs. 20,000.

      If he/she applies the existing NCB discount to this amount, the premium on the damage component would be reduced by 45 per cent, which works out to Rs. 11,000. Therefore, the total payable premium would be Rs. 16,000 instead of the full Rs. 25,000.

      What Happens if the Car Insurance Transfer Remains Incomplete?

      Three things can happen if a car insurance transfer is not completed:

      • Firstly, if you do not transfer the existing motor insurance policy on your second-hand or used car to your name, you cannot make any insurance claims. This means you will be unable to make a claim irrespective of whether your car suffers damages or you incur any third-party liabilities.
      • Secondly, if you do not transfer the motor insurance to the new owner of the car, then the Motor Accidents Claims Tribunal may order you to pay for accidental third-party liabilities for the damages caused by the vehicle driven by the new owner.
      • Thirdly, if the car insurance transfer does not happen, you will have to pay heavy traffic fines for driving without a valid car insurance policy.

      You May Also Like: Transfer Car Insurance When Buying 2nd Hand Vehicle

      Who is Responsible for the Transfer of Car Insurance Policy?

      As per Section 157 of the Motor Vehicles Act, 1988, the person who sells the car is responsible for ensuring the transfer of the existing motor insurance policy to the new owner of the car. The transfer should be carried out within 14 days of the sale of the vehicle.

      For the first 14 days of the purchase, the third-party cover on the car is automatically transferred and remains active.

      However, the own damage cover will become active only after the transfer of the policy from the previous owner to the car's new owner. If the transfer is not made within 14 days of the car's sale, the third-party cover will also cease to exist from the 15th day.

      In a Nutshell

      Investing in a new asset requires thorough and meticulous planning. To a buyer, a used car still represents a new investment. So, it is only right that the process includes a proper transfer of rights, ownership, and insurance name transfer to the new car owner. Therefore, make sure to transfer the existing insurance policy to the new owner of the vehicle to avoid falling into any legal and financial trouble.

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      How to Transfer Car Insurance FAQ's

      • Q1: Can I transfer third party car insurance?

        Ans: The third party car insurance can be transferred from the previous owner to the new owner of the vehicle. Although third party cover is automatically transferred for the first 14 days of the purchase, the cover has to be transferred to the new cover to ensure coverage from the 15th day.
      • Q2: What is the format for car insurance transfer letter?

        Ans: You should write the car insurance transfer letter by addressing the manager of your motor insurance company and request him/ her to transfer the policy. Alternatively, you can also download the application for car insurance policy transfer from your insurer's website.
      • Q3: Can I transfer my NCB to the new owner of my car?

        Ans: No. You cannot transfer your NCB to the new owner of the car as NCB is granted to the policyholder for not raising any claims and not to the car.
      • Q4: Can I transfer my car’s RC without transferring vehicle insurance?

        Ans: No. You cannot transfer the RC or registration certificate of your car to someone else’s name without a vehicle insurance policy. This is because four-wheeler insurance is one of the documents to be submitted to the RTO to get your four wheeler’s RC transferred.
      • Q5: How much time does it take for an RC to be transferred?

        Ans: Usually, it takes about 20 to 60 days to get the RC of a car transferred, depending on different situations. The time frame varies if the new owner of the vehicle also falls under the jurisdiction of the same RTO or if his/ her RTO is in a different state.
        Similarly, the time frame is different in case the previous owner has died, and the policy has to be transferred to the name of his/ her legal heir.
      • Q6: How much fee do I have to pay to transfer the ownership of my car?

        Ans: The car ownership transfer fee varies from one state to another. For example, the fee for transferring the RC in Delhi is between Rs. 300 to Rs. 500.
      • Q7: Can I transfer the ownership of my car online?

        Ans: No. You cannot transfer the ownership of your car online. You will have to physically visit your RTO and submit all the required documents to get the ownership of your car transferred to someone else’s name.
      • Q8: Can I get a NOC from my RTO online?

        Ans: Yes. You can get an NOC or No Objection Certificate from your RTO online by downloading Form 28. The form acts as an application to issue the NOC and should be submitted to your RTO and other required documents. After your police verification and clearance of Audit Para, your RTO will give you an NOC

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      *Savings are based on the comparison between the highest and the lowest premium for own damage cover (excluding add-on covers) provided by different insurance companies for the same vehicle with the same IDV and same NCB. Actual time for transaction may vary subject to additional data requirements and operational processes.

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