Buying a car, whether used or new, triggers an emotion of happiness and joy in an individual. It is considered as one of the major milestones in a person’s life than a mere necessity. Hence, it is imperative to take steps to safeguard or protect the new possession. Let’s look at the options of buying a motor insurance to protect your car.
When a person buys a second-hand car, there might be two situations. One, the previous owner has taken a comprehensive insurance for the vehicle and the expiry date is still months away and the insurance also comes along with the car. Two, there might not be any insurance available for the vehicle.
In the first scenario, where the insurance taken by previous owner is available, one must immediately apply for transfer of insurance in his/her name. The buyer must approach the insurance company that has issued the policy to the previous owner of the vehicle with the original certificate of insurance, proof of sale of vehicle (RTO forms/RTO transfer fee slip), and permission to transfer the insurance in the new buyer’s name from the previous owner.
The insurance of the vehicle in that case can easily be transferred in the name of the new owner by providing these documents and a small fee for issuance of new Certificate of Insurance in the name of the new owner.
You can be at peace till the expiry of the remaining insurance period once you have the insurance transferred in your name. This is the simplest, quickest, and the cheapest way to get the insurance cover for your vehicle. However, there is a rider here. the insurance has to be continued with the same insurer, irrespective of the service levels, add-on cover offering, etc.
There have been multiple instances where owners have suffered a financial loss after failing the eligibility criteria of car insurance claims for their second-hand cars. One important reason being the new owner did not transfer the insurance policy in his/her name after the purchase. Also, if the new owner’s name does not reflect on the motor insurance policy, it signifies that there is no valid contract between him and the insurance company. In this case, the new owner will not be able to claim any damage or loss due to an accident or any unfortunate event. Therefore, it is extremely important to transfer the insurance in the new buyer’s name within a specified time frame.
There could be a second scenario, where the insurance bought by the previous owner is not available. In such a situation, the insurance for the vehicle must be arranged afresh for full one year. This is similar to buying insurance for any other car with only difference that the vehicle has to be inspected before the insurance cover starts. One can look for options available in terms of add-on covers available along with the base cover for the vehicle to ensure that the financial loss is protected to the extent possible. Various add-on covers like nil depreciation, cover for consumable expenses, and loss of key are generally available.
You can also look at the service levels, claims settlement ratio, cashless claim tie-ups with garages, premium rates and other such things before you decide on one insurer.
In this process, one has to undergo an additional requirement of getting the inspection of the car before the insurance cover can be started. This is done by the insurance company to ensure that there is no damage to the vehicle at the time of starting the insurance. Apart from insurance solution for the vehicle in either of the above scenarios, one must ensure that the vehicle ownership is also transferred in the transport authority’s records to complete the transaction of purchase of a second-hand vehicle.
Be it a used car or a new car, buying a car insurance policy is important as it provides financial security against any expenses you may incur due to an unforeseen event.
The author is the MD and CEO of Raheja QBE General Insurance