As any prospective owner gleaning through the condition of pre-owned or a second-hand car, a very important aspect of the vehicle may not be attracting more attention. The car insurance which offers the financial cover for the vehicle is the one of the most instrumental documents to be verified and needs to be duly transferred to the buyer along with the process of selling. The buyer should be careful enough to analyse the document of insurance before the transfer. Assuming in the hypothetical situation of the second hand car buyer and seller Delhi missing out to get the car insurance to be transferred in his or her name, it would eventually pose a big risk when the purchased vehicle is involved in an accident. Adding to the physical pain, the lack of proper insurance would be an emotional distress as it deprives the second-hand car owner to claim any compensation amount. We’ll deal with the exact type of issues that may affect the new owner if the insurance is not transferred.

Initiating the process
The fundamental reason for many people preferring to buy second hand cars is their comparatively lower value on account of depreciation over the years. And in the cloud of different procedures involved in buying the pre-owned car, the insurance aspect demands more importance. Ideally, it is both the seller and the buyer of the vehicle who should have adequate awareness about the insurance policy, pertinent to its transfer, retaining the component of NCB (No Claims Bonus) and other relevant factors. Even if one of the vital parameters is left out it can prove to be costly mistake and entail other unnecessary issues for both the parties involved. From the perspective of the seller, the insurance policy should be transferred to the buyer of the car after the car is sold.

The Significance of NCB
After the process of car sale to the new owner, the earlier owner should certainly claim the certificate for no-claims bonus, if there exists any from the car insurance company as the policy is being transferred in the name of the buyer. No Claims Bonus (NCB) is defined as the discount offered on own damage premium which is offered only to policy holders who never made any claim for the insurance amount in the previous years. The duration of the all-important NCB is in the range of 20 – 50 percent, which is dependent and proportional to the number of claim-free years. It is also important and pertinent to note that the NCB is a non-transferrable component to the buyer of the car from the seller.

Validity and transfer of insurance
The NCB certificate provided to the first owner of the car holds it validity for duration of three years. This discount would be directly applicable on any new insurance policy which is bought along with a car, but strictly within the period specified in the certificate. Another advantage of NCB is that it holds completely good if the owner prefers to go with a new insurance firm for the car. The buyers need to be conscious of the fact, once the second-hand car is bought, it is equally important to complete the transfer of ownership of the vehicle’s insurance policy within a period of 14 days of purchase of the vehicle. The failure to complete the process of insurance transfer within the specific period becomes the ground for rejection of the claim. The Insurance Regulatory and Development Authority (IRDAI) of India has made adequately clear through its norms that none of the claims will be entitled for settlement if the registration and insurance policy of the car do not bear the same name and address.

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