The used car market in India has seen exponential growth over time. In the last few decades, the stereotypes around buying a used car dissolved in practical reasoning. This gave way to the boom of the used car market, which is currently 1.3 times the size of the new car market in India.
While buying a used car, one of the chief concerns a buyer has is surrounding the car insurance policy ownership. In this article, we've tried to address this topic by answering the possible questions you may have about used car insurance. Let's get started.
Why do I need car insurance?
According to the Motor Vehicles Act, every motor vehicle plying on Indian roads must have a third-party motor insurance policy. Driving any car – old or new – without a valid car insurance plan is illegal and punishable by law. Apart from the legal obligation, there are other vital reasons to procure car insurance.
- Coverage against risks: A comprehensive car insurance policy for used cars acts in the same way it does for new cars. When you buy a second-hand car, you should get it insured to protect it from all sorts of risks and adversities. Not that it nullifies the chance of a mishap, but it covers the expenses you may incur afterwards.
- Road accidents: Should a car ever meet with a road accident; car insurance covers damages to the vehicle and death/permanent disablement of the owner-driver. It also covers any third-party liability that may arise due to the collision.
- Natural calamities: A comprehensive car insurance policy will cover any damage caused to your car by natural disasters like earthquake, storm, flood, volcanic eruptions etc.
- Third-party liabilities: If your car collides or causes damage to a third-party due to negligent driving, you are required to pay for the damages out of your pocket unless you have a valid third-party car insurance policy. With car insurance, the insurer will take care of all the expenses you owe to a third party.
- Security against car theft: If you happen to lose your car or if someone steals it, you can claim cover under your car insurance policy. Your insurer will compensate you for the car's value, according to the Insured Declared Value (IDV) fixed at the time of policy purchase.
So, what happens to my second-hand car's insurance?
Suppose you have bought a used car with a valid car insurance policy. In that case, you need to transfer the insurance policy in your name when you transfer the used car's ownership. Some people transfer the policy in their names while some opt for a new car insurance policy altogether. Whatever the case is, there is only a 14-day window to transfer a car insurance policy ownership.
To transfer the car insurance policy of a used car, you need these documents –
- Original Registration Certificate (RC) with the new buyer's name
- Forms 29 and 30 that bears the signature of the previous owner
- Certificate of insurance
- A copy of the car policy
- The transfer fee and the transfer of registration certificate
- New proposal form
- New copy of the registration certificate
- Old policy document
- No Objection Certificate (NOC) from the previous policyholder
- No Claims Bonus (NCB) difference amount, if there is any
Now, if you are not lucky enough to have an existing car insurance policy on the second-hand car, don't fret. You can always buy a new car insurance policy for your used car.
How do I buy car insurance for a used car?
The process of renewing car insurance or buying new car insurance online is pretty straightforward. First, you need to read about the policy and learn its inclusions/exclusions. You can head to our car insurance page on ICICI Lombard, one of India's reliable insurance providers.
For getting used car insurance online, you need to visit the our car insurance page and –
- Enter your mobile number
- Enter your email address
- Enter your used car's registration number
- Click on the 'Get Quote' button
Consider performing a proper car inspection before buying a car insurance policy. You may be required to furnish the report of the car inspection done by a professional. You should also check the previous insurance claim history.
The No Claim Bonus (NCB) on a car insurance policy often creates confusion for the new owner of a used car. NCB is the insurer's reward to the policyholder, for not making any claim during the policy year. People often mistakenly think that they are entitled to the NCB benefits as the new policyholder of a used car insurance policy.
However, the NCB benefit is for the previous policyholder only. The newest owner of the car is not entitled to any of the NCB benefits.