What Can Happen if You Ignore the Transfer of Insurance for a Used Car?

Second hand cars or used cars have gained popularity over the last decade. A lot of people today prefer to buy a used car instead of a brand new car. Some people do so due to budget constraints as they can’t afford to buy a new car of their choice. Some people buy second hand cars as they live in accident-prone areas or are not skilled drivers and do not want to pay big in getting their car repaired often. Besides, used cars go through lower depreciation as compared to brand new cars. Whatever the reason may be, used cars have witnessed a tremendous rise in their sales.

Buying a second hand car is not as easy as buying clothes from a shop. It is much more complicated and involves a lot of paperwork. For instance, you need to transfer the ownership of the used car to your name by getting its reTragistration certificate (RC) transferred. You also need to get the existing car insurance policy of the used car transferred to your name from the previous car owner’s name. If you miss any of these paperwork, you will land yourself in serious legal troubles that may lead to major financial losses.

Documents to Check While Purchasing a Used Car

You must check for the following documents and get them transferred to your name while buying a second hand car. Take a look:

  • Car registration certificate
  • Service book of the car
  • Car insurance policy
  • Invoice for the car’s purchase
  • Form 32 and Form 35 (if the previous owner has an active car loan)
  • Dual fuel certificate (if the car runs on petrol/ diesel and CNG)

Transfer of Car Insurance for a Second Hand Car

Car insurance is mandatory for every four wheeler plying on public roads. According to the Motor Vehicles Act, 1988, a car is legally allowed to be driven on public roads only if it is covered under car insurance with a minimum of third party coverage. If the cops catch you driving a car without a valid car insurance policy, you will be fined or sent to jail. Therefore, whether you have a first hand car or a used car, it should be covered under at least a third party car insurance policy.

If you are purchasing a second hand car, there are high chances of the vehicle being covered under an ongoing car insurance policy. With the sale of the car, the insurance policy is not of any use to the previous owner of the car. But this car insurance policy cannot be used to cover a sold car as the policyholder is no longer the owner of the car. This is important because the name of the owner on the car’s RC as well as the car insurance policy should always be the same.

However, you still need a minimum of third party car insurance cover to financially safeguard your car and abide by the law. You cannot wait for the car insurance renewal of your used car to purchase a policy in your name. It is only logical to get the ongoing car insurance for the used car transferred to your name instead of buying a new one.

Before you get a car insurance policy transferred to your name, you should be aware of the two kinds of insurance coverage which is transferred. Car insurance can either be comprehensive or third party car insurance. For the unversed, third party car insurance covers only third party liabilities of the car owner while comprehensive insurance covers own damages of the car along with third party coverage. When a car insurance policy is transferred, the third party car insurance or the third party coverage part under a comprehensive insurance policy will automatically get transferred for up to 14 days from the sale of the car. To get own damage coverage or third party coverage even after 14 days, you need to get the existing car policy transferred to your name.

Things to Keep in Mind for a Seamless Used Car Insurance Transfer

If there is an existing car insurance policy for the second hand car you have purchased, transfer of the policy is crucial. However, you make your transfer process seamless by keeping the following things in mind. Take a look:

  • Transfer Car Insurance Policy Within Two Weeks

    Car insurance for a second hand car should be transferred from the old owner to the new car owner’s name within two weeks or 14 days of the sale of the car. According to section 157 of the Motor Vehicles Act, 1988, the person who has purchased the second hand car should transfer the car insurance policy within 14 days. The law states that it is the responsibility of the new car owner to initiate the transfer process and get the transferred within 14 days.

    However, if the new car owner is not initiating the process, then it is the responsibility of the previous car owner to remind him/ her to file for policy transfer to avoid any legal or monetary trouble in the future. If the car insurance policy purchased by the previous owner has expired, you can get the car insurance renewal done in your name. Make sure to compare different car insurance renewal plans online before buying any one of them.

  • Fill Up a Fresh Proposal Form

    In order to get the insurance policy for your used car transferred to your name, you need to fill up and submit a fresh proposal form to the motor insurance company. You will also need to submit Form 29 and Form 30 to the insurance provider. Moreover, you will also have to submit a copy of the existing car insurance policy document to the motor insurer to initiate the policy transfer process.

  • Submit the New RC to the Motor Insurer

    The change in the ownership of a car is reflected by the change in the car owner’s name in its registration certificate. You will have to apply for a change in the car owner’s name on the RC of the second hand car before applying for car insurance policy transfer. It may take a few days before you receive the new RC for your second hand car with your name on it. As soon as you receive it, you must submit a copy of the new RC to your motor insurance provider. It will speed up your policy transfer process and ease up any complexities.

  • What Happens if You Don’t Transfer Car Insurance for a Used Car?

    The motor laws of the country give you a period of 14 days from the car’s sale date to get the car insurance policy from the previous owner’s name transferred to your name. The third party coverage part is transferred automatically for a period of 14 days. After this period, the transferred policy will be applicable to cover any own damages or third party liabilities arising out of the second hand car.

    In case you fail to get the policy transferred within 14 days, your car will have no valid insurance protection. This will happen because the motor insurance company will be under no liability to cover any financial losses arising out of your second hand car irrespective of whether you incur third party liabilities or own damages to the vehicle.

    There can be two consequences of this situation. Firstly, you may find yourself liable for fine or imprisonment if the police catch you driving your used car without any valid comprehensive or third party insurance cover.

    Secondly, if you meet with an accident while driving your second hand car after 14 days, you will not be able to able to raise a claim with the motor insurance company. If the accident case goes to the Motor Claims Tribunal Court, the judge will direct the previous owner of the car to pay for the losses as the car insurance policy is still under his/ her name. In short, a lot of legal troubles can follow suit. Hence, it is advisable to get the car insurance for the used car transferred from the previous owner’s name to your name within 14 days.

In a Nutshell

The sale of second hand cars may be extremely popular today. Yet, people fail to get the existing car insurance policy transferred to their name due to which motor insurance companies often reject car insurance claims arising out of used cars. The financial loss and legal trouble that may arise in such cases can be overwhelming for you. Hence, if you want your second hand car to stay covered against any financial loss at all times, make sure to get comprehensive or third party car insurance policy transferred from the previous car owner’s name to your name. Car insurance renewal with the same or another insurer can be done after your transferred policy expires.

Written By: PolicyBazaar - Updated: 14 December 2020
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