Still not convinced about the gravity of car insurance policy transference? Let’s take a look into a few scenarios when a policy transfer is quintessential.
Scenario 1 - You have finally managed to save enough finances to purchase a second-hand car. You go online, search for a few second-hand car models and decide on one of them. You ask the respective seller about how many kilometres it has run in its lifetime, and for how long has the car remained active.
You find the answers to your satisfaction and decide to purchase it. You negotiate its price and accordingly make your payment. Subsequently, you apply for the transference of registration certificate to your name but delay the application for car insurance policy transfer unless RC transference is concluded. It takes a month, after which you apply for a car insurance policy transfer.
Now, after a few weeks, your car’s engine starts acting up. You take it to repairs to one of the insurer’s network garages and file a claim for cashless repair. But it denies settling your claim as you are not the one with whom they entered into a contract. You lodge a complaint against them, but it is refuted on the grounds that you are not the policyholder and ergo have no right to file a claim.
It is because you needed to apply for the necessary changes in policyholder status within 14 days of purchase, as per the Motor Vehicles Act 1988.
Scenario 2 - You decide to sell your car, which you have used for 3 years. It has an active insurance policy, valid for 2 more years. You find a buyer who agrees to pay a reasonable price for it. The car’s registration certificate is transferred accordingly. But, you did not transfer the existing insurance policy under the assumption that it will be transferred automatically. The buyer assumes the same and no changes are made to such an insurance plan.
A few weeks later you receive a notification from your district court asking you to settle a claim made by a third party on account of an accident. You find out that your car’s buyer was involved in an accident, where he crashed with another bike. He filed a claim with the insurance company, but it was refuted as you are still the policyholder. Hence, the legal onus is on you to compensate for the losses of the third party to whom damage was caused by the buyer.
Both the instances sound unreasonable and unfair, right?
Unfortunately, the law is designed that way to compel individuals to transfer insurance policy as early as possible after a second-hand car transaction is made.