Team AckoNov 16, 2021
Once you have decided to sell your car, it is natural to make efforts to cut down on related expenses. Thus, you might think: is it possible to sell a car without a valid car insurance policy or how to sell a car without insurance? The answer to the questions is that a valid vehicle insurance certificate is needed to sell a car. This article will explore different aspects of this answer.
Selling a car can evoke different emotions in different people. Those who are attached to their beloved ‘dreams on wheels’ might find parting difficult. Those who view cars from a practical lens: just a machine can comparatively sell the vehicle without feeling a range of emotions. Whichever category you belong to, you must sell your car the right way. Failing to do so can result in unfavourable consequences.
Read ahead to know details related to selling your car the right way. You will also find a Frequently Asked Questions section in the latter part of the article. Also, there’s a Key Takeaways section that summarises the article for you. Note that this article offers generic information. For specific information, visit your nearest Regional Transport Office and an organised car seller.
If you are not going to drive your car, if you are going to sell it, and if you are not too interested in spending time and money on insuring it, you certainly might wonder how to sell a car without insurance. However, there are strict laws against doing so. This is because selling your car means a change of ownership. And an insurance certificate is crucial in this regard.
As per the Ministry of Road Transport and Highways’ Parivahan website, there are three following ways in which transfer of ownership of a vehicle usually takes place:
In case of a normal sale
In the case of the owner’s death
In the case of public auction
In all these three cases, the vehicle’s Certificate of Insurance is listed under the Required Documents section. As a result, transferring insurance is a crucial part of transferring ownership. Therefore, it is not suggested to sell a car without a valid insurance policy.
Listed below are prominent reasons why you must make efforts to keep your car insurance policy active while selling it.
Technically, a car is considered sold when its Registration Certificate features the new owner’s name. As stated in the previous section, the transfer of ownership cannot be completed without insurance. For a legal transfer, you need a valid insurance policy. This insurance policy also needs to be in the new owner’s name. Indian Motor Vehicles Act requires vehicles to be insured under a motor insurance policy. Therefore, a valid insurance policy is a must when it comes to a car sale.
Although selling a car has become simple and convenient thanks to the organised second-hand car market, it might not always be possible or lucrative to sell your car in one shot. You might want to evaluate a few buyers, check where can you get the best price, and then sign the deal. All of this can take time. And if you are using the car during this interim period, you will need to insure it to stay on the right side of the law and to stay insured against financial liabilities arising out of vehicle accidents and other such unpredictable incidents.
You decide that you are not going to renew car insurance and not going to drive the car. You are going to call the buyer to your garage, where the car is stored and then sell it. Unfortunately, your locality gets flooded. Including your garage. The car gets damaged. Since it is without any insurance coverage, you will have to pay the repair charges from your pocket.
Suppose the car you are about to sell is uninsured. A prospective buyer approaches you for the test drive. You oblige. Both you and the buyer venture outside in the vehicle. Unfortunately, the prospective buyer causes an accident. Since your car is uninsured, the insurance company will not pay for the damages. Thus, ensure proper insurance cover even while you are considering selling your car.
Consider a situation where your car without any insurance coverage and you are driving it to an official second-hand car showroom to sell it. During the journey, you break the traffic signal. A cop approaches you and asks for the usual papers: Registration Certificate, Pollution Under Control (PUC) certificate and insurance. Right, the insurance policy! Which is invalid! In this case, you will be charged with a monetary penalty.
Now you know the perils of not renewing your car insurance before and while selling your car. But you also want to ensure that you do not spend a lot on insurance since you are not going to use the car as much as you used to. And anyway, a buyer is just around the corner. So, what’s the way out? There’s a middle ground to this, a balancing act.
Just look at the situation once again.
You need to insure your car before selling it.
You need to save money on insurance since you are selling your car.
The balancing act is to purchase a minimalistic car insurance policy so that you tick the box regarding the legal angle. Also, you do not spend a lot.
You got two options.
Buy a Comprehensive Plan with a low premium without any add-ons. It will give you the ‘Own Damage’ cover. Comparing and buying will help you fetch such a plan at a low premium. No add-ons will again ensure you spend less on insurance.
Purchase the basic, no-frills Third-party Car Insurance. This is the policy that is required by the law. And this plan is relatively a lot cheaper. You will end up saving big. However, since this does not cover ‘Own Damage’, your car will not be insured exhaustively.
Whether you sell your car privately or through the organised market, the transfer of ownership will only be completed legally when the RC is transferred in the new buyer’s name. For that, car insurance is essential. Thus, selling your car privately without insurance might not be the right way to go about considering legal issues associated with the process.
Here are some valuable pointers concerning selling a used car.
Keep the insurance cover active until you officially sell the vehicle.
Have all the necessary paperwork in place and sell the car legally.
Make sure to transfer the car’s ownership and insurance in the new buyer’s name.
Pay all the debts associated with the car to be sold.
You can transfer the No Claim Bonus component to your new vehicle.
Here are some important takeaway points from this article.
A valid car insurance policy is important to officially sell your car in India.
You can consider renewing your “to-be sold car” with a minimalistic Third-party Car Insurance to save money.
The previous car owner (you) shall retain the No Claim Bonus (if any) in case of a sale.
The new owner shall only be recognised as the new owner when the RC contains the new owner’s name.
Here are some frequently asked questions and their answers concerning a car sale.
Which Regional Transport Office (RTO) forms are needed to sell a vehicle the normal way?
You will need Form 29 and 30 to sell a vehicle in the normal way. This means not in the case of the owner’s death and the vehicle purchased in an auction.
Will the organisation where I sell my car help me out with the RC transfer process?
Nowadays, organised players in the second-hand car industry do help car sellers with the RC (Registration Certificate) transfer process.
What are the important details to be looked at in a sale contract?
A sale contract must have the right details related to the car model, colour, registration number, engine number, chassis number, and the total payment amount. If you are not comfortable about certain terms in the contract, run it through a professional (for example, an experienced car seller/buyer or a lawyer) before signing it.
If the car I am about to sell has a wide-ranging Comprehensive Cover with valuable add-ons, can I factor that while selling the vehicle?
Yes, a wide-ranging valid car insurance cover is certainly a point to consider while deciding the selling price of your vehicle.
Which document is considered to determine the ownership of a vehicle?
The vehicle’s Registration Certificate is considered to determine the ownership of the vehicle.
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