If you are a car owner, the necessity of Car Insurance Policy, especially on Indian roads, cannot be denied. It could be your first car, a second-hand car or even if you own multiple vehicles, all informed and seasoned car users realize how critical a motor insurance policy is. It is a must for a smooth, stress-free and joyful driving experience.
At the same time, while selling your car, as the ownership changes, you should ensure proper transfer of insurance policy and other documents to secure yourself against any future liabilities.
Selling a used car is no longer uncommon in India. Gone are the days when people used to buy a car and drive it for 10, 15 or even 20 years.
More than 30 lakh used cars exchange ownerships every year in India. (Source: The Economic Times: Auto)
Every day, new car models show up and now, there is a large variety to choose from. Also, rising income levels, availability of finance options and ease of selling a pre-owned car means as a customer you don’t have to own the same car for years. Whenever you wish, you can sell your existing car and go for a new one.
So, what happens to your car insurance policy when you sell your car?
While it may not be too difficult to locate a buyer for your car, ensuring the correct transfer of your insurance policy and other documents to the next owner requires careful attention.
Let’s simplify this process for you. We’ll quickly understand why you should focus on a structured transfer of your car insurance policy documents, other papers and what the steps you need to follow are.
Documentation & Insurance Policy Transfer: The Necessity
Have you made up your mind to sell your old car?
That’s the first step, now you should focus on relevant details, documentation aspects and policy transfer.
Why is it necessary?
- You will not be held accountable for liabilities after you have sold the car and correctly transferred all documents, including the insurance policy.
- It allows the new owner to recover the cost of damages during an emergency.
- Appropriately transferring insurance policy and other documents secure you against any potential legal complications after you have sold your car.
Documentation: Types & Procedures
Before transferring your car insurance policy, transferring the car to the new owner’s name is the first step you need to take.
The documentation process can be divided into the following two categories:
1. Transactional Documents:
- If you have reached an understanding and finalized the deal with the potential owner, you should now get the sale affidavit and the delivery note signed by him/her. The copies of identity, address proofs such as PAN card and Aadhar card should be attached. The payment cheques you are receiving must also be attached with the sale affidavit.
- The sale affidavit must be signed and then notarized to ensure it acts as an agreement stating the successful transfer of all car related liabilities to the new owner.
2. RTO Documents:
- Form No. 28: 3 Copies, in original, are needed. It is an application for receiving a NOC (No objection certificate) from the registering authority. This NOC is crucial as it declares that you do not have any unresolved liabilities or obligations related to the car.
- Form No. 29: 2 Copies, in original, are needed. This form is used as a notice of transfer of ownership of the car to the RTO. It validates that all documents related to the car, be it Registration certificate, PUC certificate or Car insurance, have been handed over to the new owner.
- Form No. 30: 2 Copies, in original, are needed. This is used as a confirmation to Form No. 29. It validates that all liabilities, bonds and responsibilities of the car sold are now being transferred to the new owner.
- Clearance Certificate: It is an application made to the RTO to inform them about the sale of your car. It carries the details of the new owner, seller and the vehicle being sold.
After receiving the agreed amount and signing the paperwork, you may handover car documents such as RC (Registration Certificate), PUC, Invoice and Application for Insurance Transfer to the new owner.
Car Insurance Policy Transfer: Steps & Procedures
You can transfer your existing car insurance policy to the new owner who does not have to take a new one.
While transferring your car insurance, if you have not made any claims during the policy tenure, you can ask for an NCB (No Claims Bonus) Certificate from your insurance company.
This certificate can possibly help you secure discounts from your new insurance policy provider in future.
As an existing insurance policyholder, you must submit the following documents for Insurance transfer.
- Transfer of ownership application.
- Original Registration Certificate (RC), stating the new owner’s name.
- Old Insurance Policy Certificate.
After submitting these documents and applicable fees, the insurance company passes the endorsement of transfer. They conduct a verification to start the process and also notify both, the previous and new owner, about the completion status. It has to be completed within 14 days.
In the end, an updated car insurance policy is sent with the new owner’s name on it.
By following these insurance policy transfer and documentation steps, you can ensure a timely handover of your car. It is also critical for you to insure your new vehicle as soon as possible.
With Quickinsure, No paperwork required! Get a quick response & Instant car insurance policy.