How to transfer car insurance Policy?

When buying or selling a used car, many people overlook one critical step: transferring car insurance. Failing to transfer car insurance on time can result in claim rejection, legal complications, and loss of policy benefits if an accident occurs after the change of ownership. This creates uncertainty at a time when financial protection is most needed. Understanding how to transfer car insurance ensures that the new owner remains legally covered and continues to enjoy uninterrupted policy benefits without risk. The process may seem confusing at first, but with proper guidance, transferring a car insurance policy is a straightforward step toward securing seamless protection after vehicle ownership changes.

What is a car insurance transfer?

As the name suggests, car insurance transfer is the process of transferring the car insurance policy from one person to another. When you buy a second-hand car, you must make sure to get the car insurance ownership transferred from the seller to your name.

In other words, a car insurance transfer legally confirms the withdrawal of one party’s name from the car insurance contract and at the same time admits another person’s name. According to Section 157 of the Motor Vehicles Act, it is compulsory for both the parties (seller and the buyer) to the transfer the car insurance policy within 14days of registration.

Why is transferring car insurance important?

When a car changes hands, updating ownership on paper is not enough. The insurance policy must also reflect the new owner, or it simply does not offer valid protection. This is why transferring car insurance is such an important step after buying or selling a used vehicle. If this is missed, even a genuine claim can be rejected. Understanding how to transfer car insurance helps avoid unnecessary stress, financial loss, and legal complications later on.

●       Prevents claim rejection :- If the policy is still in the seller’s name, the insurer can refuse to process claims raised by the new owner.

●       Keeps you legally protected:- As per IRDAI rules, insurance details must match the vehicle’s Registration Certificate, making transfer car insurance essential for compliance.

●       Avoids liability disputes:- Without proper transfer, the seller may still face legal issues if the car is involved in an accident.

●       Protects No Claim Bonus (NCB):- The seller can retain their NCB by requesting an NCB retention letter for use on their next policy.

●       Ensures smooth continuity of cover:- Knowing how to transfer car insurance keeps your vehicle insured without gaps during the ownership change process.

How to transfer car insurance from one person to another?

When a vehicle is sold, the car insurance policy should be transferred to the new owner to maintain uninterrupted coverage and remain compliant with the Motor Vehicles Act, 1988. While the new owner may opt for a fresh policy, transferring car insurance is usually more practical and allows the seller to retain benefits such as the No Claim Bonus (NCB).

Step 1: Transfer the Registration Certificate (RC)

Complete the ownership transfer at the Regional Transport Office (RTO) by submitting Forms 29 and 30 along with the required documents. The RC must reflect the new owner’s name, as insurers verify policy details against RC records.

Step 2: Inform the Insurance Company

Once the RC transfer is initiated or completed, notify the insurer about the change in ownership and request a policy transfer. This formally begins the car insurance transfer process.

Step 3: Submit the Required Documents

The insurer may request:

●       Copy of the existing insurance policy

●       Updated RC or proof of RC transfer application

●       KYC documents of the new owner

●       Sales agreement or delivery note

●       No Objection Certificate (NOC) from the seller, if required

●       PUC certificate, if requested

Note: Forms 29 and 30 are submitted to the RTO, not the insurer.

Step 4: Pay the Transfer Fee

A nominal administrative fee is charged for updating the policy details. The new owner generally pays this.

Step 5: Vehicle Inspection (If Required)

In some cases, the insurer may conduct a physical inspection to assess the vehicle’s condition before approving the transfer or adjusting coverage and premium.

Step 6: Policy Endorsement by Insurer

After verification, the insurer updates the policy with the new owner’s name and contact details. Premium or coverage may be revised if necessary. The seller’s NCB does not transfer and remains reserved for their future policy.

Step 7: Receive the Updated Policy

The new owner receives the revised policy document confirming valid insurance cover and claim eligibility.

Important: 14-Day Time Limit

As per Section 157 of the Motor Vehicles Act, the transfer must be completed within 14 days of the ownership change. During this period, only third-party cover applies automatically. Failure to complete the process may result in:

●       Own-damage claims are invalid

●       Policy and RC details mismatch

●       Legal penalties for uninsured driving

Following these steps ensures the car insurance is correctly transferred, keeping both parties protected and ensuring continuity of cover.

Documents required for transferring car insurance policy

To successfully transfer car insurance to the new owner’s name, certain documents are required to verify ownership change and update policy details. Keeping these ready helps ensure the process is completed smoothly and without delay.

●       Updated Registration Certificate (RC) showing the new owner’s name, or proof that RC transfer is in progress

●       Existing car insurance policy copy

●       Form 29 – Notice of transfer of ownership of the vehicle (submitted to the RTO)

●       Form 30 – Application for intimation and transfer of ownership (submitted to the RTO)

●       Sale agreement or delivery note as proof of transaction

●       No Objection Certificate (NOC) from the previous owner or financer, if applicable

●       KYC documents of the new owner for identity and address verification

●       Pollution Under Control (PUC) certificate, if requested by the insurer

●       Passport-size photographs of the new owner, where required

●       Vehicle inspection report conducted by the insurer, if applicable

No claim bonus in car insurance transfer

The No Claim Bonus (NCB) in car insurance is linked to the policyholder, not the vehicle itself. This means when a car is sold, the NCB does not transfer it to the new owner, as it reflects the claim history of the previous insured person. To retain this benefit, the seller should request an NCB certificate from the insurer before completing the ownership transfer. This certificate allows the seller to carry forward their accumulated discount, typically ranging from 20% to 50% based on claim-free years, to a new insurance policy for another vehicle.

The buyer begins with zero NCB and gradually earns it through claim-free policy periods under their own name, ensuring that discounts are awarded fairly based on individual driving history.

Documents required for NCB retention letter

You will need the following documents:

●       Request letter for NCB retention or transfer

●       Copy of the existing car insurance policy

●       A sale agreement or a delivery note as evidence of the vehicle sale

●       Updated Registration Certificate (RC) showing transfer of ownership

●       NCB certificate issued by the insurer

What happens if the car insurance transfer remains incomplete?

If the car insurance transfer is not completed after a used car is sold, it can create serious complications for both the buyer and the seller.

●       Claims can be rejected by the new owner:- Since the policyholder's name does not match the updated Registration Certificate, the insurer may treat the policy as invalid for the buyer and deny any claim raised.

●       The seller may remain legally accountable:- As the insurance is still in the seller’s name, they could be held responsible for third-party liabilities if the car is involved in an accident after the sale.

●       Risk of driving without valid insurance:- Although third-party cover is temporarily extended for up to 14 days, failure to complete the transfer within this period can leave the vehicle without valid insurance protection.

●       Legal penalties may apply:- Driving without proper insurance is a violation of the Motor Vehicles Act and can result in fines and, in repeated cases, stricter legal action.

●       Financial exposure for the buyer:- In case of an accident or theft, the buyer may have to bear the full cost of repairs or damages, as the insurer will not honour claims on an untransferred policy.

Who is responsible for the transfer of car insurance policy?

Both the seller and the buyer play important roles in the car insurance transfer process, and their responsibilities are clearly defined. The seller is expected to inform the insurance company of the vehicle's sale and to provide key documents, including the sale agreement, Form 29, Form 30, and a copy of the existing policy. The buyer, however, is primarily responsible for completing the process. This includes submitting a formal application, updated RC, and personal documents to transfer car insurance into their name within 14 days of purchase. Understanding how to transfer car insurance ensures the policy remains valid and that claim rights are legally protected.

Final word

Car insurance transfer is a vital step when you buy or sell a car. If you hold a car insurance policy with Zurich Kotak General Insurance, and want to transfer it to someone, you can get in touch with the customer care representative and they will guide you through the entire process, and resolve all your queries.

FAQs

What is the transfer fee for car insurance?

The transfer fee varies by insurer but usually falls between INR 50 and INR 200. This is a nominal administrative charge applied when you transfer car insurance to update the policyholder’s details following an ownership change. In some cases, an additional inspection fee may be used if the insurer requires a physical vehicle check before approving the transfer.

What is the time limit to transfer car insurance?

You must apply to transfer car insurance within 14 days of transferring vehicle ownership. During this period, only third-party coverage is considered valid. If the transfer is not completed within this timeframe, the insurer may reject own-damage claims, as the policyholder details will not match those on the Registration Certificate.

How to change the name in a car insurance policy?

To change the policyholder name, submit a transfer request to the insurer along with the updated RC, Form 29, Form 30, KYC documents, sale agreement, and the existing policy copy. Once verified, the insurer will endorse the changes and issue an updated policy in the new owner’s name.

Can I delay transferring vehicle insurance after purchasing a second-hand car?

Delaying the process is not advisable. While third-party cover remains valid for the first 14 days, own-damage coverage may not be honoured if the policy is still in the seller’s name. Completing the transfer immediately ensures continuous protection and avoids claim rejection.

Is transferring a car insurance policy important for the seller?

Yes, transferring car insurance is critical from the sellers point of view. This is because you may be legally obliged to compensate for the losses suffered by the third-party, even if the new car owner gets involved in an accident.