Second Hand Car Insurance

Second-hand/used car insurance means a type of car insurance that covers old cars, second-hand cars, or used cars against damages due to accidents, calamities (natural/manmade), theft, etc.  When a pre-owned vehicle is sold, its insurance coverage also needs to be transferred from the previous owner to the new owner. It ensures that the vehicle continues to remain insured after the ownership changes and that the new owner is protected against unforeseen financial losses.

Like insurance for a new car, second-hand car insurance can provide coverage against accidents, theft, fire, natural calamities, man-made disasters, and third-party liabilities, depending on the type of policy chosen. In many cases, buyers can transfer the existing insurance policy to their name or opt for a new policy that better suits their coverage requirements.

Is It Mandatory to Get Second Hand Car Insurance? 

Yes, as per the Motor Tariff Act, after you buy a used car, it is mandatory to get the used insurance policy transferred to the new owner within 14 days of buying the car, failing which you will not be able to file claim.

Also, only third-party car insurance gets automatically transferred to the new owner for the first 14 days of buying the car, however, it does not apply to Standalone Own Damage car insurance.

The right insurance for a second-hand car depends on the vehicle's age, condition, and your coverage needs. In most cases, buyers should have at least a valid third-party insurance policy, as it is mandatory under Indian law. However, if the car is in good condition and has significant market value, opting for a comprehensive car insurance policy can provide broader protection.

• Third-Party Insurance: Covers legal liabilities arising from injury, death, or property damage caused to a third party. It is the minimum insurance required to drive legally in India.

• Comprehensive Insurance: Covers both third-party liabilities and damages to your own vehicle caused by accidents, theft, fire, natural calamities, and other insured events.

• Comprehensive Insurance with Add-ons: If the vehicle is relatively new or valuable, you can enhance coverage with add-ons such as Zero Depreciation Cover, Engine Protection Cover, Roadside Assistance, and Return to Invoice Cover (where applicable).

For most used car buyers, a comprehensive policy offers the best balance of protection and peace of mind, especially if the vehicle is less than 5-7 years old and regularly used. However, for older vehicles with a lower market value, a third-party policy or a basic comprehensive plan may be more cost-effective.

When you buy a used car, both the vehicle ownership and the insurance policy should be transferred to your name. Completing these transfers ensures that you become the legal owner of the vehicle and can enjoy uninterrupted insurance coverage.

Step 1: Transfer Vehicle Ownership

• Obtain the required ownership transfer forms from the seller.

• Submit the necessary documents to the concerned RTO, including the registration certificate (RC), identity proof, address proof, and other applicable documents.

• Pay the prescribed transfer fee and complete the ownership transfer process.

• Once approved, the RC will be updated with the new owner's details.

Step 2: Transfer the Insurance Policy

• Inform the insurer about the vehicle purchase.

• Submit the insurance transfer request along with the required documents, such as: 

• Vehicle Registration Certificate (RC)

• Sale agreement or ownership transfer documents

• Existing insurance policy copy

• Identity and address proof of the new owner

• Pay any applicable transfer charges.

• The insurer will verify the documents and issue an endorsement reflecting the new owner's details.

Step 3: Review and Update Coverage

After the transfer is completed, review the policy coverage and consider purchasing additional protection or add-ons if required. This can help ensure that the insurance coverage aligns with your needs and the vehicle's current value.

Timely transfer of both ownership and insurance helps avoid claim-related issues and ensures that the policy benefits remain available to the new owner from the beginning of ownership.

Following documents will be needed for the transfer of insurance policy:

• Original Registration Certificate (RC) of the car with new buyer’s name

• Forms 29 and 30 that bears the sign of the previous owner

• Certificate of insurance

• A copy of the car policy

• The transfer fee and transfer of registration certificate

• New proposal form

• New copy of the registration certificate

• Old policy document

• No Objection Certificate from the previous policyholder

• No Claims Bonus difference amount, if any

Once this paperwork is done and the appropriate fee is paid, the insurance company will get to the work and transfer the car insurance into the new owner’s name.

After doing all the paperwork make sure to check your name on the Insurance as well as the RC and also note that here, you being the new owner will have to pay any NCB difference, since No Claim Bonus in car insurance will remain with old owner and new NCB will be applicable for you. It is important to note that the RC and the insurance document should have the same owner.

Pro Tip - For those of you planning to sell their car, we have some important information for you too. Always remember when selling your car to a new owner, your NCB still stays with you, as it is applied only on the driver and not on the car. You can utilize it on a new policy bought within 3 years.

It can be transferred while changing the vehicle or the insurer as it depends on the driver. The NCB rates are fixed, it ranges from 20% to 50% from 1 to 5 years. It becomes constant after 50% and that’s called NCB sunset clause. All add-ons except Road Side Assistance Cover and Tyre Protection cover take a hit on the NCB if claimed for, as all of them do affect the base policy and are considered as a claim.

Before doing insurance of old car, remember to check the following things: