How to Transfer Bike and Car Insurance to New Owner

Buying a used or second-hand vehicle is an important decision and it requires a lot of effort. You need to make sure that the vehicle is evaluated thoroughly in terms of the brand, price and the choice of the model. Also, a crucial part of buying a used car or bike is ensuring all documents are in place including the transfer of vehicle insurance (car or bike) to your name. To bring more clarity on how to do a car or bike ownership transfer to a new owner, let’s go through the procedure to transfer car or bike insurance in detail.

A car or bike insurance transfer is a process in which you transfer the vehicle insurance on the new owner’s name. As per the terms and conditions of the insurance policy, the Registration Certificate (RC) and the insurance policy should be in the same person’s name. Many do not adhere to this clause while selling/buying used vehicles and end up in financial losses in case of an unfortunate incident. Thus, if you are buying a second-hand vehicle, you need to undergo the transfer process.

After completing the RC transfer process of the vehicle, you need to transfer the insurance policy to your name. As a buyer, it’s good to take the initiative to cover your car or bike with a motor insurance policy. However, as per the law laid out by the transport department, it’s the responsibility of the seller to ensure the transfer of car insurance to the buyer.
 

The process of transferring two-wheeler insurance or car insurance is simple and easy. Let’s look at the steps to transfer the vehicle insurance to your name:

To successfully transfer vehicle  insurance, the following documents are required to be submitted along with the application to change the ownership of a car or bike insurance:

The following RTO documents are necessary while transferring the ownership of the vehicle. 

As per the rules, car or bike insurance transfers should happen within 14 days of vehicle ownership transfer. The third-party cover remains valid for 14 days after the transfer of the vehicle. However, if you have a Comprehensive policy, then only the third-party cover will remain active until the transfer. If the transfer does not happen within the 14 days time period, then you will lose benefits, including NCB discounts.

To ensure you experience a hassle-free transfer process, consider the following tips:

As a seller, if you have not registered any claim during the policy period, the insurance company rewards you with the No Claim Bonus (NCB), a discount on premium when you renew the vehicle insurance policy. This is provided by the insurer as a percentage and increases every claim-free year.

Since the NCB is offered to the owner of the vehicle for not raising any claim and not offered on the vehicle, it cannot be transferred to anyone else. Hence, as a buyer, you cannot take advantage of the NCB enjoyed by the previous vehicle owner. But, as a seller you can transfer the NCB to a new policy.

Here is a snapshot of the NCB rate grid:

Under Section 157 of the Motor Vehicle Act, it’s the responsibility of the seller to transfer the insurance policy to the buyer’s name within 14 days of buying the vehicle. Please note that only the third-party section of the policy is automatically transferred. This means you do not enjoy coverages such as Own Damage Insurance (OD) or any Add-ons (if any).

If you fail to transfer the bike or car insurance policy to your name, the insurer is not liable to cover any losses sustained by you which includes both third-party and own damage sections. Additionally, the court may send a notice to the previous owner to compensate for the loss incurred by the third party, for an accident caused by the new owner.

Be it a new vehicle, or a used car or bike, motor insurance is mandatory in India. Apart from being a mandatory requirement, it acts as a financial cover in case of damage to the third party as well as damage to your vehicle. 

Here are some reasons why vehicle insurance is necessary:

It is the responsibility of both the seller and buyer to transfer a car or bike insurance policy. The seller should inform the insurer about the insurance transfer process and initiate it on the buyer’s behalf. The buyer should submit all the required documents to complete the transfer process. Once the process is completed, it is the buyer’s responsibility to ensure that all the transfers have been successfully completed.

Thus, now that you know that the process of transferring bike/car insurance is easy, make sure that you do it on time. This will help you enjoy continued policy coverage and drive legally on the Indian road as a buyer.