The Need to Transfer Insurance Policy in a Second-Hand Vehicle Sale/Purchase

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    Purchasing a pre-owned car or bike has its own challenges. Finding that one seller who has the vehicle to match your budget and travel needs is not entirely sufficient. Vehicle owning requires complying with a set of mandatory requirements set by the government.

    Registration Certificate

    As a seller, you need to get the RC transferred as soon as possible to avoid legal issues. For example, if the new owner gets involved in a hit and run case, you will receive legal challans at your registered address as the registered owner of the vehicle.

    As a buyer, you can land into trouble if the seller reports a theft of his vehicle. You will have no way to prove that you had purchased the vehicle and not stolen it.

    Insurance Policy Claims

    Just like the RC, get your insurance policy transferred immediately. Insurance claims are rejected if the name in the insurance policy does not match the RC.

    When should you transfer the insurance policy?

    Section 157 of the Motor Vehicle Act says that on the purchase of a used vehicle, you need to transfer the insurance policy within 14 days of purchase.

    How to transfer the insurance policy?

    You can fill the RTO form 29-30 (Form 29 for seller & form 30 for the buyer) at your Regional Transport Office (RTO), and share the same with the RTO's acknowledgment to the insurer. You need not wait for the RC to be transferred.

    You might be charged Rs 50 as processing fee and the difference in premium. The difference in premium can arise from the "no claim bonus" that the seller gets as a discount for never claiming the insurance. A buyer is not eligible for it, hence the difference.

    You also need to provide a No Objection Certificate (NOC) through Form 28, along with RC, Certification of Taxation (CT), Pollution Under Control (PUC) Certificate, a declaration of the sale of the vehicle and the existing insurance policy.


    Own damage cover

    The vehicle insurance policy has sections known as "third party damage" and "own damage." In the first 14 days, the third party damage gets transferred but not the own damage section.

    What if you don't transfer it in 14 days?

    If the policy is not transferred and still bears the old owner's name, the insurance company will not pay any claims for damages to the third party or your vehicle.

    There is also a possibility of the court sending a notice to the previous owner, asking him/her to pay for the third party's damages.


    Buying a new vehicle

    If the seller decides to buy a new vehicle after the sale, he can lose up to 50% discount on new policy arising from the no claim bonus on not transferring the insurance policy.

    Best for both the parties

    The seller, as well as buyer, will benefit from the transfer as providing proofs in case of accidents or false claims can be a gruesome exercise.

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