When selling your vehicle, you must transfer the associated insurance as well. This is because motor insurance is tied to the vehicle, not the owner. Failing to transfer the insurance policy can lead to legal issues if any damage involves a third party.
While transferring a motor insurance policy, one of the common concerns is transferring the No Claim Bonus (NCB). Fortunately, the good news is that NCB is associated with the policyholder, not the vehicle, meaning a seller can retain NCB earned over the years. The NCB is a discount ranging from 20-50% accumulated over 5 years provided by insurance companies for claim-free years, rewarding responsible and safe drivers with lower premium costs.
“You cannot hand over your No Claim Bonus to someone else, even if you sell your bike and transfer the insurance policy. After completing the transfer, you will need to get a letter from your insurer confirming that you have retained your NCB. You can then use this letter to get discounts on the premium when you buy insurance for your new bike,” states Wise Money weekly report by SMC.
Who is responsible for transferring the motor insurance policy? According to Section 157 of the Motor Vehicle Act, the buyer should apply for transferring the policy within 14 days of purchasing the vehicle. The motor laws give 14 days for the transfer of the policy. Within these 14 days, the policy automatically covers any third-party damages. After 14 days the transferred policy will cover both the own damage and third-party liability. If the policy is not transferred within 14 days and there is no valid insurance the motor insurance company will be under no obligation to cover losses of the second-hand car. “Furthermore if an accident occurs with the new owner and the insurance is not properly transferred, the court might hold the previous owner responsible for compensating the third party’s losses,” as per the report. Therefore, it is important to ensure all paperwork is correctly completed.
Documents Required To Transfer Insurance To New Owner
You must provide specific documents and a transfer fee to transfer vehicle insurance to the next owner. Here’s what Wise Money weekly report states –
Application Form
The application form serves as your request for the transfer.
Form 28 (NOC)
Form 28 is essential for obtaining a No Objection Certificate (NOC) from the RTO. It confirms that you do not have any claims or dues on the vehicle, clearing the way for the transfer of ownership.
Form 29
Form 29 notifies the RTO that the ownership of the vehicle is being changed to another person. It informs them that all necessary documents, including the Registration Certificate (RC), insurance policy, and Pollution Under Control (PUC) certificate, are being handed over to the buyer by you.
Form 30
Form 30 confirms the transfer initiated by Form 29. It officially acknowledges that you have transferred all legal responsibilities of the vehicle to the buyer.
NOC (No Objection Clause)
You will also need to get a NOC, indicating they have no objection to transferring the insurance policy to the new owner.
Inspection Report
The insurance company conducts this report to assess the vehicle’s condition before the transfer of ownership.
New Registration Certificate
After completing the above steps, a new registration certificate is given in the buyer’s name.
Clearance Certificate
If you are migrating the vehicle to a different Regional Transport Office (RTO), whether within or outside the state, you will need this certificate. It verifies the transfer and includes buyer and seller details, along with vehicle information.
Hence, do keep your paperwork complete if you plan to purchase a second-hand car so that you are not tangled in unnecessary complications.