What Happens to my Comprehensive Insurance When I Sell my Car?

When you sell your car, your comprehensive coverage does not automatically transfer to the new owner. You generally have the option to transfer the policy ownership or cancel the insurance.

Are you planning to buy a new car and sell your old one? If so, knowing about the resale process is crucial. While reselling a car, the common question that always arises is what happens to your comprehensive insurance in the process.

The Motor Vehicles Act 1988, Section 157, mandates a seller to ensure that the existing car insurance policy is transferred to the new owner within 14 days of the sale. 
Here is what happens while selling a car with comprehensive insurance: 

1.Issuance of No Claim Bonus (NCB)-As soon as you inform your insurer, they will check whether you have made any claims during the ongoing policy tenure or not. If not, you will receive a no-claim bonus (NCB) certificate. Since this certificate is non-transferable, only you, as a seller, are entitled to use this bonus. It remains valid for up to three years.   

2.Transferring Policy Coverage-If you are selling your car in the middle of a policy tenure, the buyer has the freedom to continue with the policy benefits. When policy tenure ends, they can either continue with the same insurer or move to another insurer. 

3.Temporary Transfer of the Third-Party (TP) Cover-Since comprehensive coverage by default has third-party coverage, this particular coverage gets temporarily transferred to the new owner's name during a sale. It remains valid for 14 days after the sale. Within this period, the new owner needs to get the policy completely transferred to their name to ensure continuous coverage. 

4.Discontinuation of Own Damage (OD) Cover-The OD coverage follows a particular transfer process. The seller needs to fill out an insurance transfer form provided by their insurer and submit Form 29, Form 30, NOC, and inspection report.

5.Unused Premium Can Be Refunded-If you are not transferring the policy, you may be eligible for a refund on the unused premium. The insurer will process it upon receiving proof of sale and a cancellation request, subject to terms.

Here is a step-by-step guide to follow when you want to transfer comprehensive car insurance: 

When selling your car, make sure the insurance aspect is handled with care. Ensure the policy is correctly transferred or formally cancelled, and retain your No Claim Bonus for future use. Proper documentation and timely updates not only protect the new owner but also shield you from legal or financial liabilities after the sale.