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8 Consequences of Ignoring Transfer of Used Car Insurance

Team AckoJan 18, 2024

The consequences of not insuring your car, be it new or used, can have a huge financial burden on you in case your car meets with an accident or if it is stolen or is damaged due to man-made or natural calamities. You need a robust financial cover to protect you against these liabilities. By transferring car insurance of the used car to your name, you can protect yourself against these financial losses.




8 Consequences of Ignoring Transfer of Insurance for a Used Car

Second-hand cars do cost money, and you might have to use your savings or avail a car loan to buy the used vehicle. You might have bargained and bought a lower-priced used car, you also should ensure you complete the process of transferring the car insurance to your name. The following reasons help you understand what happens if you do not transfer car insurance to your name:

1. Invalid Car Insurance Protection

Driving the used car with insurance in the name of the previous owner will only lead to the rejection of any claims. Since the ownership of the car and the policyholder are different, your claim will be rejected.

2. Ignorance Leads to Claim Rejection

Being casual about not transferring the insurance to your name may result in not qualifying for claims in case of accidental damages or even theft. If you are planning to buy a second-hand car or have bought one, it is essential that you transfer the insurance to your name immediately.

3. Can Cause Problems to the Previous Owner

Ignorance by the previous owner of not transferring or cancelling the car insurance will lead to unnecessary legal problems in the future. The seller has to make sure the insurance is transferred immediately after the sale.

4. Financial Implications

Liabilities, including that of yours and the third party, can impact your finances. With non-valid used car insurance, claims raised against the policy for accidental damage to your car and to the third party (if any) will be rejected.

5. Liable for Fine

Driving an uninsured car or with invalid car insurance is a violation of government rules and regulations. In India, you will have to pay the required fine for driving the car without insurance.

6. Imprisonment In Case Driving Without a Valid Car Insurance

In case you are found driving the used car with an invalid car insurance policy, the traffic police will impose a fine and/or even imprisonment.

7. You Cannot File a Claim

As the owner of the car, you are liable to insure the car so that you have financial protection in case of the third party liabilities or against damages to your car. However, having invalid insurance for your used car will lead to rejection of claims.

As per the Motor Vehicles Act, you have to insure your used car with the Third-party Car Insurance failing which you can face legal hassles in case of an unfortunate accident involving the third party.

How to Transfer Insurance for Second-Hand Cars?

The process of transferring car insurance for used cars is as simple as purchasing insurance for a new vehicle if you follow the required guidelines. Follow the steps below to understand how to transfer insurance for used cars:

  • Step 1: Make sure you have all the documents (Registration Certificate, Form 29, 30 and Sale deed along with personal documents for identification purpose.

  • Step 2: Fill the proposal form and submit the same to initiate the transfer process.

  • Step 3: Choose the comprehensive car insurance plan along with necessary add-on covers.

  • Step 4: Your car will be assessed by the surveyor if required to process the insurance policy.

  • Step 5: Post the assessment, the insurance will be transferred from the previous owner to your name.

Why is it Necessary to Insure Your Second-Hand Vehicle?

Insuring your used car is not just a legal requirement, but it safeguards you from financial burden in case of accidental damages or liabilities due to natural/man-made calamities.

Things to Keep in Mind for a Hassle-Free Second-Hand Car Insurance Transfer

Apart from a complete check-up by a professional mechanic while buying a second-hand car, you need to ensure that the transfer of car insurance from the previous owner to you is seamless and hassle-free. Below are some tips to keep in mind while transferring the insurance to your name:

  • Transfer the insurance to your name within the specified time frame.

  • Submit all the necessary documents such as the proposal form, Form 29 and 30, Sale deed, and other documents as requested.

  • Submit the Registration Certificate (RC) for a seamless process.

Documents to Check While Purchasing a Used Car

The following are documents that you need to obtain from the previous owner while purchasing a second-hand car:

  • Registration Certificate (RC) of the car.

  • Existing car insurance policy.

  • Invoice for the car purchase.

  • In case of an existing active car loan, obtain Form 32 and 35.

  • Dual fuel certificate in case the car runs on petrol and CNG.

  • Service book of the car if available.

In a Nutshell

Whether you are buying a new car or a used one, you need to insure it to protect yourself against financial liabilities arising due to accidental damage, theft, fire, flood, riots, third party life or property, etc. It provides you with the peace of mind knowing well that you are financially protected in case of any unfortunate accidents.

Frequently Asked Questions

Here are the frequently asked questions about the insurance for second-hand or used cars:

1. How to transfer car insurance to another person’s name?


You can transfer the car insurance from one person to another by following the required guidelines. The process is simple and easy. You can refer to the above-mentioned steps to transfer the policy to another person’s name.

2. Can I transfer the RC to the new owner without the vehicle insurance?


No, you cannot transfer the ownership of the vehicle without a valid motor insurance policy. The Regional Transport Office (RTO) will transfer the ownership upon submitting the required documents, which includes the car insurance policy.

3. Can the No Claim Bonus (NCB) be transferred to the new owner of the car?


No, you cannot transfer the NCB to the new owner of the car. The NCB is earned by the policyholder and only she/he can enjoy the discount. That said, the existing car owner can transfer the NCB to a new insurance policy.

4. What happens to my existing car insurance when I sell it to a new person?


The existing car insurance continues to be active until the expiry date even if you have sold your car to a new owner. Hence, it is important to cancel the insurance when you sell your car to a new owner, so you are not liable for any mishaps that are not caused by you as the insurance policy is still on your name.

5. Which is the best car insurance plan for used cars?


The comprehensive car insurance plan is ideal as it covers both your vehicle as well as the third-party liabilities. In case of accidental damage, theft, man-made/natural calamities or in case of losses to the third party life or property, the comprehensive plan is the perfect cover for your second-hand car. It also lets you choose from a wide variety of add-on covers to make the policy more exhaustive.


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