How Does Insurance Policy Change When You Sell Your Car?
Importance of insurance
Buying a motor insurance, unlike other insurances, is more of a legal boundation rather than a choice. A comprehensive insurance ensures your vehicle for not only damage caused by you to a third party but also covers damage to your car due to man-made calamities, theft, impact damage. Accidents and thefts can happen anytime; a good insurance policy not only covers you for financial losses at such times but also gives you peace of mind and one less thing to worry about in case of such an event.
Any of us can face a situation when we have to sell out an old car. It may be due to a new model introduced in the market that we want to purchase or we may not need a car at all or due to any other personal reason. Now, one you have found a potential buyer and finalised the deal, it is finally time for the most daunting task - the paperwork. So, here we have tried our best to make it easy for you by providing all the information you may need to know.
The process of selling your car to someone is broadly categorised in to two steps:
- Transfer of Ownership
- Transfer of Insurance
For transfer of ownership, you may require a list of documents. All these documents have to be given to the new owner of your car.
- Registration certificate of your car
- Form 29/30
- Taxation certificate
- PUC certificate
- Declaration that you are selling the car
- A copy of existing insurance policy
- No objection certificate
Transfer of Insurance
Inform the insurance provider and get the No Claim Bonus reserving letter from your insurer: If the seller has not made any claims in the policy, he is eligible for discounts in the premium amount for that insurance policy. So, this entitlement is owned by the seller and not the buyer. This discount can further be retained and used when the seller buys a new vehicle. The seller just has to approach the insurance company of old car insurance and take no claim bonus reserving letter. The certificate is valid for three years to get a discount on his new insurance policy. It is now easy to transfer your old car insurance online by logging on to HDFC ERGO website.
Pay attention to the time period your car has been insured for when you transfer the policy: Let us understand this concept with an example. For instance, if you got the car insured in January 2017 and sell it in September 2017, then you would have already paid the premium for an additional 3 months. So, you can factor that into the selling price of your car if you have a lot of margin left or if you were paying a large amount of premium. So, despite the transfer of insurance, the premium has already been taken care of. However, the buyer should take care of any available no claim bonus.
Suggest the buyer to buy a new policy:In case the policy of your car is approaching renewal, suggest the buyer to purchase a new policy as soon as possible. Buying a new policy at the time of transfer of insurance is easier and hassle free. You can use an old car insurance premium calculator online and purchase the policy in quick and easy steps.
Consequences of incomplete transfer
- If the insurance policy is still in the name of seller, then the buyer will not be eligible for any claims at the time they are required.
- If the transfer of ownership has not been completed, then in case of any legal offence that involves the vehicle, the previous owner will be held liable.
Hence, all the insurance and documents are required to be transferred in the name of new owner so as to get rid of any liabilities that may arise in future.
Disclaimer: The above information is for illustrative purpose only.For more details, please refer to policy wordings and prospectus before concluding the sales.