Personal mobility has become very important in the aftermath of COVID-19, and more and more people are opting for four wheelers. However, given the current economic conditions, buying a new vehicle may not be the best idea for everyone. To that effect, pre-owned cars make a lot of sense, as in many cases they cost about half the price of a new vehicle. Having said that, whether it is a new vehicle or a used vehicle, having insurance is a must, and here is what you need to know about insurance for used cars.
Why do you need it?
Now, the simple answer to why you need insurance for an old vehicle is because it is required by law. As per the India Motor Tariff, 2002, all car owners driving on the roads of India must have a car insurance policy that will cover any damages caused to a third party due to accidents caused by your car. Also, having valid auto insurance gives you financial support that covers all damages, injuries, disabilities or death caused by a vehicle accident. In most cases, it is possible that the previous owner of the vehicle failed to renew the insurance before selling the vehicle, in which case you should avoid buying such a vehicle or ensure that you buy valid insurance at the earliest. You can also use the point as part of your negotiating strategy to bring the price down.
Read also: Most Common Places to Check for Rust When Buying a Used Car
How is it different for used cars?
Now all vehicles have an Insured Declared Value, or IDV, and the IDV of a pre-owned vehicle will be lower than that of a new car. Now, this should mean that the premium amount associated with a car insurance policy for a used car will be less. However, considering how a used vehicle will be more prone to situations like breakdown or total loss, the total premium amount for an insurance policy will be higher than for a new car. If the car you are buying already has valid insurance, it is important that you transfer it to your name along with other paperwork. The process can be a bit tedious and involves visiting the Regional Transport Office (RTO), transferring the Certificate of Registration (RC) in your name, and filling up a few forms and paying the policy transfer fee. If you are buying from an organized used car seller they usually do it for you. However, if you are buying it directly from the car owner then buying a new insurance policy altogether would be the easiest way.
Read also: Used car leasing a new trend among used car buyers in India: Survey
Documents required for transfer of insurance
If you decide to transfer an existing insurance policy then as mentioned earlier, you will have to first transfer the ownership of the vehicle to your name and for this the following documents are required,
- Application Form 29, 30 (Signatures of Buyer and Seller)
- Original Registration Certificate (RC)
- address proof of buyer
- An affidavit from the buyer and seller regarding transfer of ownership
- No Objection Certificate from the concerned RTO/AETC in case of transport vehicles
- reasonable fee
- valid insurance certificate
Once transferred, you can ask the existing insurance provider to transfer the policy in your name and this will require additional documents as follows:
- old insurance certificate
- Original Registration Certificate (RC) with transferee name (new owner or buyer)
- Application for transfer of ownership
- Required fee, if any.
Read also: Buying a used car: Top 5 checkpoints to follow
Other benefits of used car insurance
Apart from providing financial stability against accidental damages and injuries, there are some additional benefits of insuring your pre-owned vehicle. First, given the fact that most older cars don’t usually come with security or anti-theft devices, they are often targeted by thieves. Hence, an insurance policy covering theft will definitely go a long way. Secondly, getting an insured vehicle will also give you access to its claim history which will help you determine the true condition of the car. To know the information related to the claim history of the car, all you have to do is give the policy number to the car insurance company.