Selling an old car can often feel like letting go of a trusted companion. However, it is equally important to ensure that your four-wheeled buddy is taken care of at their new home. When selling a car, you transfer everything from the Registration Certificate (RC) to your car’s insurance policy to the new owner.
If you’re ready to sell your car and transfer the insurance to the buyer, we’ve created a handy guide for you to do so seamlessly!
Transferring your car insurance is a crucial step when selling your car. Here’s why:
Transferring the ownership of a vehicle also involves transferring the insurance policy to your name. It is advisable for the buyer to take the initiative to ensure their vehicle is covered by a motor insurance policy.
However, according to the regulations set by the transport department, it is the seller’s responsibility to facilitate the transfer of the car insurance to the buyer.
The process of transferring automobile insurance is generally straightforward. Before starting the process, it is important to gather the necessary documents for transferring the title when buying a second-hand vehicle:
Once you have the required documents, follow these steps to transfer the vehicle insurance to your name:
CARS24 Expert Tip: Remember to keep copies of all the documents and communications related to the insurance transfer process for future reference.
To facilitate the transfer of vehicle insurance, you need to submit the following documents along with the application to change the ownership of the car or bike insurance:
Also Read – How to remove Hypothecation from car RC book
If you, as the seller, have not made any insurance claims during the policy period, you are eligible for a No Claim Bonus (NCB). The NCB is a discount on the premium when you renew the vehicle insurance policy.
It is provided by the insurer as a percentage and increases with each claim-free year. It is important to note that the NCB is specific to the owner of the vehicle and cannot be transferred to another individual. Therefore, as the buyer, you cannot directly benefit from the NCB accumulated by the previous owner. However, as the seller, you have the option to transfer the NCB to a new insurance policy that you may obtain.
Here’s a glance at the NCB rate grid:
|No Claim Bonus Rate Grid||%|
|After one claim-free year||0.2|
|After 2 consecutive claim-free years||0.25|
|After 3 consecutive claim-free years||0.35|
|After 4 consecutive claim-free years||0.45|
|After 5 consecutive claim-free years||0.5|
No, the No Claim Bonus (NCB) cannot be transferred to the new car owner. The NCB is a discount offered by the insurance company to the policyholder for not making any claims during the policy period. It is a reward for the policyholder’s good claim history.
Since the NCB is specific to the policyholder and not the vehicle itself, it cannot be transferred to another individual, including the new car owner. Each individual builds their own NCB based on their claim-free years and it is not transferable.
If the transfer of the vehicle insurance policy is incomplete, there can be several consequences as per Section 157 of the Motor Vehicle Act. It is the seller’s responsibility to transfer the insurance policy to the buyer’s name within 14 days of purchasing the vehicle.
However, it’s important to note that only the third-party section of the policy is automatically transferred, while coverages such as Own Damage Insurance (OD) and any Add-ons (if applicable) are not transferred automatically.
If the transfer of the insurance policy is not completed, the following implications may arise:
To avoid these potential issues, it is crucial to ensure the timely and complete transfer of the insurance policy to your name as the new owner of the vehicle. This will help safeguard your interests and ensure that you have the necessary coverage in case of any unfortunate events or accidents.
As per the regulations set by the Insurance Regulatory and Development Authority of India (IRDAI), the responsibility for transferring the car insurance policy lies with the seller of the vehicle. As the seller, it is your responsibility to initiate the process of transferring the insurance policy to the buyer’s name.
You should contact the insurance company and inform them about the sale of the vehicle. You also need to provide the necessary documents, such as the sale agreement, the buyer’s details, and the buyer’s address proof, to facilitate the transfer process. The insurance company will then guide you through the required steps and documentation for transferring the policy.
Once the transfer process is initiated, the insurance company will verify the documents and complete the transfer of the car insurance policy to the buyer’s name. The buyer should ensure that they receive the updated policy documents and confirmation from the insurance company about the transfer.
Transferring your car insurance is as important as transferring your vehicle’s Registration Certificate (RC) because it is a legal mandate in India. If you’re selling your car, you must transfer your existing insurance to the new owner (buyer).
So, if you need help with understanding how to transfer car insurance from one person to another, our guide is designed to assist you from start to finish!
Q. Can third-party insurance be transferred?
Yes, the third-party insurance section of the policy is automatically transferred to the new owner when the vehicle ownership is transferred. The third-party insurance coverage remains intact for the new owner.
Q. Is NOC required for bike ownership transfer?
Yes, there are different types of No Objection Certificates (NOC) required for the transfer of two-wheeler ownership. Form 28, which acts as an NOC from the seller, is a mandatory document during the transfer process.
Additionally, if the transfer is happening between different states or Regional Transport Offices (RTOs), an NOC from the respective state’s RTO is required. If the vehicle was under hypothecation with the previous owner and the hypothecation has ended, an NOC from the respective bank is also necessary.
Q. Can I transfer the NCB benefit to the buyer?
No, the No Claim Bonus (NCB) benefit cannot be transferred to the new owner of the vehicle. The NCB is associated with the policyholder’s claim history and cannot be transferred to another individual. However, as a seller, you can utilize the NCB benefit if you decide to purchase an insurance policy from a new insurer.
Q. How long do I have to transfer car insurance after selling my car?
After selling your car, it is recommended to transfer the car insurance policy to the buyer’s name within 14 days. It is the responsibility of the seller to initiate the transfer process and inform the insurance company about the sale.
Promptly transferring the insurance policy ensures that the new owner is properly covered and avoids any potential gaps in insurance coverage.
Q. Do I need to notify the insurance company about the sale before transferring the insurance in India?
Yes, it is important to notify the insurance company about the sale of your vehicle before transferring the insurance policy to the new owner in India. As the seller, you should inform your insurance company about the change in ownership and provide them with the necessary details of the buyer.
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