Transferring Car Insurance from One Person to Another – Complete Guide

To change vehicle ownership is an integral part of the process of selling a car both the person selling the car as well as the one buying it. However, it is a fact that many of us do not have proper knowledge and clarity on a very important thing – transferring the existing car insurance policy. Let’s learn about the process in this blog.

First you must know whether you need to transfer car insurance at all while selling your car and if so, why?

Why is it important to transfer car insurance?

You need a car insurance to protect your car from any unforeseen events and damages. So, when you sell your car, there is no point in having an insurance for that car. Thus, it is important to transfer the car insurance in the name of the new owner. If you are the buyer, just ensure to get the car insurance in your name.

Below are two other important reasons to transfer car insurance policy:

• To evade any kind of future liabilities – By transferring the existing car insurance policy in your name in case you buy a second-hand car , you can stay away from any future liabilities. Without the papers being transferred, you will not be able to file a claim for any third-party liability in case of an accident. Likewise, in case you are the seller of the car you must transfer the insurance so that you do not have to pay for any third-party damages of the new owner whom you have sold your car to.
• To keep your No Claim Bonus intact – You must also transfer the car insurance papers to be able to retain your NCB bonus. Since you need to apply for the retention of NCB bonus to your insurer, you have to inform them about the selling of your car. And you cannot have the NCB transferred unless you get the insurance policy transferred to the new owner.

Process to transfer car insurance from one individual to another in India

To transfer car insurance from one person to another, you need to submit the below mentioned documents to your insurer:

• Form 29, 30 (new RC copy)
• Old car insurance papers
• NOC from previous car insurance policy owner
• Application form – New
• Insurance company inspection report
• NCB difference amount

Car insurance transfer and No Claim Bonus (NCB)

NCB is an important aspect of the car insurance transfer process. While transferring the car insurance, you must remember to retain your no claim bonus. For this, you have to apply to your insurer by submitting a NCB retention letter, which makes the previous owner of the insurance policy eligible to obtain the NCB discount.

Can you transfer NCB to the new car owner?

No, the NCB or no claim benefits are non-transferrable. So, you can transfer your car insurance policy but cannot get the NCB transferred.

Documents you would need to retain NCB

Below are the documents required to submit to the insurer to receive a retention letter for NCB:

• Submit a letter requesting the insurer to cancel the existing policy.
• Submit the original copy of car insurance policy as well as the certificate, form 51
• You also need to submit RTO form 29, which serves as a notice to transfer car ownership.
• Further, you need to submit form 30 RTO, which serves as a written vehicle ownership transfer form to intimate the insurer and to transfer  the ownership.
• You also need to submit a copy of the registration certificate book (RC book) with the new owner’s name being mentioned.
• And you need to submit delivery proof of the vehicle to the new car owner.

You have seen that form 29 and 30 are very important documents required to obtain a retention letter for NCB transfer.

What effect can it have if the car insurance transfer process is not complete?

If the car insurance transfer process remains incomplete, you will not be able to make any claims for third-party damages if any such damage is caused due to an accident or collision.

In the event that uninsured automobile causes third-party damage, you will be legally responsible the losses from your own money.

Who is responsible for transferring a car insurance policy?

The Motor Insurance Act makes it clear that it is the responsibility of the seller of the car to ensure that the current car insurance policy is transferred to the new owner. And the process should be done within 2 weeks of selling the vehicle.

Further, you must know that for the first 2 weeks of selling the vehicle, it automatically transfers the third-party insurance cover to the new owner and stays active too. However, this facility is not allowed for own damage coverage. So, to get Own Car Damage coverage, you have to wait for the transfer car ownership to be completely done. Additionally, if the transfer is not completed within the first two weeks, even the third-party policy gets dissolved.