After purchasing a used car, the owner should get the insurance policy transferred in his name within the first 14 days of the purchase.
When you sell your car or bike or any other vehicle, it is important for you as a seller to get the Registration Certificate (RC) transferred in the buyer's name. Failing to do so may lead to multiple issues like a possible legal liability if the buyer hits someone in an accident and Challans coming to your home as the registered owner is you and registered address is yours. As a buyer also, you should get the vehicle RC transferred on your name to get the peace of mind. What if the seller reports the vehicle theft and he is still the registered owner as per RC. It'll be very tough to establish that you have purchased the vehicle and not stolen it. Why get into this mess.
Varun Dua, Founder & CEO of ACKO said that if you have successfully transferred the vehicle RC on your name, it is equally important to transfer the Insurance policy in your name. An insurance policy is only valid if the name on the RC and Insurance policy is same. Many Insurance claims get rejected because of this disconnect.
“More importantly, the third party cover will lead to legal liability on your head as there is precedence where the insurer has rejected both damage & third party claims and courts have taken a decision in Insurers favour,” he added.
Process of transferring motor insurance policy
After purchasing a used car, Section 157 of the Motor Vehicle Act casts a duty on the new vehicle owner to get the insurance policy transferred in his name by applying to the insurance company within the first 14 days of the purchase.
You can simply share the filled up RTO form 29-30 (Form 29 for seller & form 30 for the buyer) acknowledged by RTO or the receipt of RTO and proof of sale, to Insurer to get the Policy transferred, no need to wait for the transferred RC for Policy transfer. An insurer may charge Rs 50 for the processing and the premium difference depending on the bonus (No-claim bonus) given to the seller which as a buyer you might not be eligible for.
“A No Objection Certificate (NOC) must also be provided through Form 28. Along with these duly signed forms, the original documents like Certificate of Registration (RC) card of the vehicle, Certificate of Taxation (CT), PUC Certificate, Declaration of selling the vehicle, Copy of Existing Insurance Policy also need to be handed over to the buyer,” said Devendra Rane, Founder & CTO of Coverfox.
“During these 14 days, the “Third Party” section of the insurance policy gets automatically transferred, however, it does not apply to the Own Damage section of the policy. The “Own Damage” section will be transferred only after the insurance policy gets registered under the new owner’s name. Post these 14 day period, if the new owner fails to get the insurance policy transferred in his/her name the insurance company will not be liable to bear any losses incurred by new owner in either of the Third Party or Own Damage sections,” said Sasikumar Adidamu, CTO, Bajaj Allianz General Insurance Company.
Moreover, if the transfer of policy remains in the process in such case the claim will not be rejected, However, it will be paid only once the proofs of transfer is submitted to the insurer.
What happens if the policy is not transferred?
“After first 14 days of the vehicle registration, if the insurance is not transferred and the policy still bears the name of the first owner, in case of an accident the claim for damages to the vehicle or third party will not be paid by the insurance company. Moreover, the court may also send the first owner a notice to compensate for the loss caused to a third party, for an accident caused by the new owner. The whole process of establishing the proofs of sale, the transfer of vehicle RC etc. by the previous owner can be a gruelling exercise,” said Adidamu.
This can be easily avoided if both as a seller and a buyer of a second-hand vehicle, one insists on getting the insurance policy transferred to the new owner’s name immediately after the sale deed is finalised.Varun Dua also said that if the seller does not transfer the policy and gets the No Claim Bonus (NCB) transferred, he loses out on the discount of up to 50 percent on the new insurance policy that he buys for his new car. “The seller also becomes legally liable in case of any offence involving the vehicle. On the other hand, the buyer will not get the claims paid in the time of need if the insurance policy is still in the name of the seller,” he added.You can now invest in mutual funds with moneycontrol. Download moneycontrol transact app. A dedicated app to explore, research and buy mutual funds.