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The transfer process is usually initiated by the seller and must be completed within 14 days of the ownership change. Key documents required include the updated Registration Certificate (RC) in the new owner’s name, a No Objection Certificate (NOC) from the previous owner, and Forms 29 and 30.
The insurance company may also require the old insurance policy documents and may conduct a vehicle inspection. A small administrative fee is typically charged by the insurer, and RTO fees apply for RC updates.
Buying or selling a car is exciting, but there is one important thing many people forget, and that is the car insurance transfer. You might think, “Do I really need to transfer the insurance too?” The answer is yes, and it’s very important.
When a car changes owner, the insurance should also move to the new owner. This helps avoid problems later and keeps you legally safe. Don't worry, the process is not as hard as it sounds.
In this blog, we will explain how to transfer car insurance from one person to another in India in a simple and easy way.
Why Do You Need to Transfer Car Insurance?
Before understanding how to transfer car insurance, let's see why it is important. Car insurance protects the vehicle from risks like accidents. If you no longer own the car, the insurance should not stay in your name.
If you sell your car, make sure the insurance is transferred to the new owner. If you buy a second-hand car, always transfer the insurance to your name. Here are the main reasons:
1 To avoid future problems
If you buy a used car and don't transfer the insurance, you may face trouble later. For example, if there is an accident, you may not be able to claim insurance. You may have to pay for damages yourself.
Also, if you sell your car but do not transfer the insurance, you could still be responsible for any damage or accident caused by the new owner.
2 To keep your No Claim Bonus (NCB)
If you do not make any claims, you get a No Claim Bonus (NCB), which gives you a discount on insurance. When you sell your car, you can transfer this benefit to your new car.
To do this, you need to inform your insurance company and get an NCB certificate. But you can only get this certificate after you transfer the old car's insurance to the new owner.
Documents Required to Transfer Car Insurance to a New Owner
To transfer car insurance, you need to request your insurance company and submit some documents along with a small fee. Here are the required documents:
- New Registration Certificate (RC) with the new owner's name
- Form 29
- Form 30
- Old car insurance policy documents
- No Objection Certificate (NOC) from the previous owner
- Filled application form
- Inspection report (done by the insurance company)
- Difference amount for No Claim Bonus (if needed)
Make sure all documents are correct to avoid delays in the transfer process.
How to Transfer Car Insurance to the New Owner?
Transferring car insurance is simple. The seller, buyer, and insurance company all need to be involved. Here is how you can do it:
- Step 1. Inform the insurance company: After selling the car, tell your insurance company about the change in ownership.
- Step 2. Submit documents: Both the seller and buyer must give important documents like Forms 29 and 30, updated RC with the buyer's name, the sale agreement, and ID proof.
- Step 3. Keep your No Claim Bonus (NCB): You can transfer your NCB to your new car. For this, ask the insurance company for an NCB certificate.
- Step 4. Pay the fee: A small fee may be charged to transfer the insurance policy.
- Step 5. Get approval: The insurance company will check all documents and then approve the transfer of the policy.
Documents Required for NCB Retention Letter
To get an NCB retention letter, you need to give these documents to your insurance company:
- Request a letter to cancel your old policy
- Original insurance policy copy and certificate (Form 51)
- Form 29 (vehicle ownership transfer notice)
- Form 30 (ownership transfer application)
- Copy of the updated RC with the new owner's name
- Proof that you have given the car to the new owner
Make sure all documents are correct so you can get your NCB letter easily.
No Claim Bonus (NCB) in Car Insurance Transfer
When you sell your car, you transfer the car and insurance to the new owner. But one thing is different: the No Claim Bonus (NCB).
NCB is a reward you get for not making any insurance claims. It gives you a discount on your next insurance premium. The longer you don't make a claim, the bigger the discount.
However, you cannot transfer your NCB to the new owner of the car. It stays with you. You can use it for your new car instead.
To use your NCB, you need to get an NCB certificate from your insurance company. This helps you get a discount on your new car insurance.
Cost and Important Points for Car Insurance Transfer
Transferring car insurance to another person is not very costly. It usually costs between Rs. 50 to Rs. 500, depending on the insurance company and the state.
To complete the transfer, you need to submit documents like the updated RC (Registration Certificate), NOC, and details of the new owner. This should be done within 14 to 30 days after selling the car.
Important points to remember:
- Transfer fee:Insurance companies charge a small fee, usually between Rs. 50 and Rs. 500.
- RC transfer fee:You also need to update the RC at the RTO, which may cost around Rs. 300 to Rs. 600.
- No Claim Bonus (NCB):The NCB stays with the old owner. It does not go to the new owner.
- Vehicle inspection:Sometimes, the insurance company may check the car and charge a small fee.
- Delay penalty:If you delay the transfer beyond 30 days, you may have to pay a penalty.
What Happens if the Car Insurance Transfer is Not Completed?
If the car insurance is not transferred, these problems can happen:
If you buy a used car and do not transfer the insurance to your name, you cannot make any claim. Even if there is damage or an accident, you will not get any insurance benefit.
If you sell your car and do not transfer the insurance to the new owner, you may still be responsible. You might have to pay for any damage or third-party claims caused by the new owner.
If you try to switch or transfer insurance and it is not completed, you may have to pay heavy traffic fines for driving without valid insurance.
Who is Responsible for Transferring Car Insurance?
As per the law, the seller (the person who sells the car) is responsible for transferring the insurance to the new owner.
- The transfer should be completed within 14 days of selling the car.
- For the first 14 days after purchase, third-party insurance is automatically active.
- But own damage cover starts only after the insurance is transferred to the new owner.
- If the transfer is not done within 14 days, even the third-party cover will stop from the 15th day.
Conclusion
Buying any asset needs careful planning. A used car is also a new investment for the buyer. So, it is important to complete all steps properly, like the transfer of ownership, rights, and insurance to the new owner. Always make sure to transfer car insurance on time. This helps avoid legal and financial problems later.
FAQs
Yes, it is very important. If you do not transfer it, you may face legal and financial problems later.
The seller (old owner) is responsible for starting the insurance transfer process.
You can use it for your new car by getting an NCB certificate from your insurance company.
Yes, you can get a certificate from your insurer to save your NCB for your next car.
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