It is mandatory for used car sellers to have a valid insurance cover on their vehicle. Using a motor vehicle without a valid insurance policy is against the law. However, it has often been seen that some car owners try to avoid renewing their vehicle’s insurance policy before selling it off. Here, we explain why it’s important to have a valid car insurance policy, regardless of whether or not you plan to sell it off anytime soon.
Before you decide to sell a car that doesn’t have a valid insurance policy, you should know about all kinds of consequences of owning an uninsured vehicle. Again, please do not forget that selling a registered vehicle requires you to hold at least a third party insurance. Hence, it’s mandated by the law to at least opt for a basic insurance policy before you sell your car. Furthermore, owning an uninsured car can land you in trouble even if it’s driven by someone else as it’s not the driver’s obligation to purchase a cover for a vehicle that is registered in your name. Similarly, you shouldn’t even rely on a prospective buyer to purchase a car insurance policy before they officially take over the ownership.
While you might think that it’s wise to save some time and money by not renewing the car insurance policy of a vehicle that you are about to sell, nothing can be further from the truth. Like we said, using an uninsured car can spell trouble, and it’s even mandated by the law to have a valid insurance cover before the new owner files for the transfer of ownership. Hence, you might end up affecting your ability to quickly sell off your car by not having an insurance cover.
With no valid insurance cover, it becomes impossible to sell your car to an authorised used car dealer, who would demand you to put a little effort and purchase an insurance cover. However, at times, people try to sell their uninsured vehicle in the private market, where an unsuspected buyer might be talked into buying your car and getting it insured before initiating the RC transfer process. However, there are many dangers of trying to sell your vehicle without a valid car insurance cover, viz. –
The easiest way to sell your uninsured car without blowing a tremendous amount of money is to opt for a third party car insurance policy, which doesn’t cost much but lets you legally sell your car. A third party car insurance cover is where the liability of the insurer is only towards the car/folks you hit and not towards damages towards your vehicle or the person driving it.
While a third party car insurance cover is not an ideal insurance policy, it’s acceptable by the law. However, do keep in mind that the prospective used car buyers might want to pay a higher amount for a vehicle that is covered under a comprehensive insurance policy instead of having a third party cover. Still, you can opt for the basic insurance cover in case you don’t want to make a big expenditure on the comprehensive insurance policy and don’t mind a slightly lower resale price.
Also, opting for a third party car insurance makes more sense in case the car you own is very old and has depreciated to such an extent that the insurance company won’t pay up much in case it’s badly damaged or stolen.
The demand for used or second-hand cars in India has been growing exponentially. However, the sale of a used car doesn’t end with finding the right buyer who is willing to pay the amount you desire. An important part of the entire ownership transfer, for both the seller and the buyer, is to ensure that the car insurance policy is transferred in the name of the new owner.
Of late, there has been increased stress on the vehicle registration transfer immediately after it is brought by a new owner. However, the transfer of the car insurance policy shouldn’t be treated as an afterthought. Sadly, most used car buyers do not have clarity about how to transfer car insurance.
The transfer of the car insurance cover in the name of the new owner should happen in tandem with the transfer of the vehicle registration. After the purchase of a used car, the policy of the previous owner doesn’t remain valid. As per the Insurance Regulatory and Development Authority of India, in case of filing an insurance claim, the name and address on both the registration and insurance documents have to match. This is necessary as in case of an emergency; it is beneficial for the new owner to recover the cost of damage quickly. Other than paying a transfer fee of Rs 50, the car insurance transfer process requires the following documents –
Are you planning to sell your car? We, at CARS24, can give you a good price for your second-hand vehicle and even take care of the RC transfer, free of cost! Visit us at CARS24.com or call us @ 1800 258 5656 to sell your car in 1 visit.