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.
The seller also has to be equally vigilant and ensure all the necessary documents are transferred in the buyer’s name. There have been instances where the new owner of the used vehicle had raised a claim against the insurance policy, which got rejecteod since the policy was still in the name of the previous owner. This is because the insurance plicy acted as a valid document or contract between the first owner of the vehicle and the respective insurer, and not of the new owner.
As per the terms and conditions of the insurance policy, the Registration Certificate (RC) and the insurance policy should be on the same person’s name. Many do not adhere to this clause while selling/buying used vehicle and end up in financial losses in case of an unfortunate incident. To bring more clarity on how to transfer car insurance to a new owner, let’s go through the procedure to transfer car or bike insurance in detail.
- How to Transfer Car and Two-Wheeler Insurance?
- Documents Required to Transfer Insurance and Ownership:
- No Claim Bonus Certificate:
- RTO Documents for Car and Bike Ownership Transfer:
- Why is the Transfer of Car or Bike Insurance Required?
- What Happens if the Vehicle Insurance Transfer is Incomplete?
- FAQs About Bike and Car Insurance Transfer:
How to Transfer Car and Two-Wheeler Insurance?
After transferring the ownership 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 to transfer two-wheeler insurance or car insurance is simple and easy. But before that, it’s important to know the list of documents required to transfer the title on buying a second-hand car or bike:
- Registration Certificate.
- Bike or car insurance policy.
Now that you know the required documents to transfer the ownership of the vehicle, let’s look at the steps to transfer the vehicle insurance to your name:
- Download Form 28, 29 and 30 from the respective RTO’s website or office.
- Fill the form and submit it to the RTO along with any relevant documents (if any).
- Ensure you take the Clearance Certificate from the RTO for the submitted forms and proof of the sale.
- Submit all the relevant documents to the insurance company.
- Pay the required fee (if any).
- Receive the policy bearing your name in an email or through the courier.
Documents Required to Transfer Insurance and Ownership:
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:
- Original RC.
- Receipt from RTO for the Forms 28, 29 and 30 (application form with the buyer’s and seller’s signature) and proof of sale.
- No Objection Clause (NOC) from the previous owner.
- Address proof of the buyer.
- Passport size photographs of the buyer.
- Old and active insurance policy document.
- Inspection report of the vehicle by the insurance company.
No Claim Bonus Certificate:
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:
|No Claim Bonus Rate Grid|
|After one claim-free year||0.2|
|After 2 consecutive claim-free years||0.25|
|After 3 consecutive claim-free years||0.35|
|After 4 consecutive claim-free years||0.45|
|After 5 consecutive claim-free years||0.5|
RTO Documents for Car and Bike Ownership Transfer:
The following RTO documents are necessary while transferring the ownership of the vehicle.
To get the NOC from the respective RTO, this form acts like an application. It also acts as proof that the seller no longer holds any liability related to the vehicle that could prevent the transfer of ownership.
It acts as an intimation of vehicle ownership transfer to the registering authority or RTO that the vehicle is being sold by the previous owner. Also, all vehicle documents such as RC, insurance policy, and Pollution Under Control (PUC) certificate have been handed over to the buyer by the seller.
Acts as an acknowledgement to Form 29 that the car or bike ownership is required to be transferred. And, all legal liabilities and responsibilities of the car or two-wheeler have been transferred by the seller to the buyer.
You require this certificate in case you are migrating the vehicle from one RTO to another within or outside the state. It includes information such as credentials of both the buyer and seller along with the details of the vehicle.
Why is the Transfer of Car or Bike Insurance Required?
As per the insurance company’s terms and conditions, a car or bike insurance is attached to a particular vehicle and not to the owner of the car or bike. So, when the vehicle ownership is transferred to a new person, the insurance must be transferred along with it. It’s imperative that the process of insurance ownership transfer is completed along with the transfer of vehicle ownership. Here are a few reasons why transfer of bike or car insurance required:
- Protect Against Future Liabilities: In case you cause damages to a third-party or their properties, and a third-party claim has to registered, the insurance has to be on your name. If it’s not transferred, the third-party claim will be rejected and will be held legally liable. Hence, it’s important to have all vehicle documents transferred to your name.
- Retaining the No Claim Bonus: If you have not raised any claim during the policy period, you are rewarded by the insurer with NCB which is essentially a discount on the premium for the next year. As a seller, you need to inform your insurer and redeem the NCB Certificate which will enable to avail discounts on the premium when you opt for a new insurance.
What Happens if the Vehicle Insurance Transfer is Incomplete?
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 (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.
Why is Vehicle Insurance Necessary?
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:
- Covers you financially in case your car meets with an accident.
- Reduces the liability of third-party damage as well as you if you have opted for a comprehensive car insurance policy.
- In case of your demise due to an accident, the insurance company compensates your family.
- Pays for hospitalization.
FAQs About Bike and Car Insurance Transfer:
Here are some frequently asked questions about the transfer of bike and car insurance policy.
Yes. The third-party insurance section of the policy is automatically transferred to the new owner.
You cannot transfer RC without insurance as it’s one of the mandatory documents required while registering the vehicle with a new owner.
The time frame varies depending on different situations. A situation such as ownership transfer is within the same RTO, or if it’s within the same state, or if it’s from other states, or if it’s upon the death of the owner of the vehicle have different time frames. It can range from 20 to 60 days depending upon the situation.
The fee can differ from state to state. For example, in Bengaluru, the fee is Rs.300 for Non-Transport Light Motor Vehicle (LMV), while it’s Rs.500 for Light Commercial Vehicle (LCV).
The fee can vary from state to state. Like in Bengaluru, the fee to transfer bike ownership within the same RTO is Rs.150.
There are different types of NOC required for transfer of two-wheeler ownership. Form 28, which acts as NOC from the seller is a mandatory document while processing the transfer. Also, if you are transferring it from another state or RTO, you require a NOC from the respective state’s RTO. Also, if the vehicle was under hypothecation with the previous owner and if the hypothecation has ended, a NOC is required from the respective bank.
You can download Form 28, which acts an application for NOC from the concerned RTO and submit it along with other required documents. The RTO will issue the NOC after police verification and clearance of Audit Paras.
No, you cannot transfer the NCB to the new owner. However, as a seller, you can use the NCB if you’re purchasing an insurance policy from a new insurer.
You can visit the respective insurance company’s website to download the application for request for transfer of insurance. Or, you could write a letter addressing the manager of the respective insurance company’s branch to initiate the process of transfer.
No. You have to visit the respective RTO and submit all the required documents to initiate the process of transferring the ownership to the new owner.