Premium may go up since old cars are prone to damage
While buying a second-hand car, the most important thing that many new owners miss is getting valid car insurance or transferring the insurance policy in their name. So, if you are planning to buy a second-hand car or have purchased one recently, you should get it insured.
Insure second-hand car
While car insurance is mandatory, many times new owners experience a financial drain after the purchase. This is because they fail to transfer the insurance policy from the previous owner to their name. To avoid losses, you must do the transfer within the stipulated time.
Buying a second-hand car comes with its long list of paperwork before the ownership is transferred. If you do not wish to transfer the insurance, you can buy a new car insurance policy. That way you can choose a plan that suits you.
The insured declared value (IDV) is the approximate market value of the car. Normally, the IDV of a used car will be lower than of a new car. Since the IDV will be lower, so will the premium. However, since old cars are more prone to damages due to breakdown, the total premium amount may go up. Customers should go with a high IDV. In case of total damage, this is the amount the insurer will give the customer.
Know claims history
Check the claim history to understand the claims filed against the policy. If several claims were filed in the last few years, it indicates that the vehicle was damaged more than once. You may check this by providing the policy number to the insurer.
Get the second-hand car inspected by the insurance company to ascertain the current condition, damages (if any), age, and the total kilometres the vehicle has covered. This enables you to find out the availability of the vehicle’s spare parts and safety devices installed in the vehicle.
The insurance company will inspect the vehicle and all these damages found during inspection will not be covered. These are called existing damages. The policy will be issued after inspection, that will be totally the insurer’s call.
Transfer on time
It is advisable to transfer the insurance in your name within 14 days of transferring the car ownership. By failing to do so, the policy remains inactive, which means you cannot file any claims. Also, this may lead to legal problems in the future. If the transfer is not complete even after 14 days, the insurance company is not liable for any losses, be it third-party or damage to your second-hand car. Policy will not be deemed active if not transferred to the name of the new buyer.
First, submit a fresh proposal form to the insurer along with the transfer of registration Certificate (RC), forms 29 and 30 (signed by the previous owner), transfer fee receipt, and the previous policy details. Two, submit a copy of the new RC issued by the Regional Transport Office (RTO) to the insurer.
And three, if the ownership change is not reflected in the new copy of RC even after the policy transfer, or you have failed to submit the proof to your insurer, then during the claim, submit the proof of transfer of the RC to your insurer to get compensated. If the policy transfer process is still going on, you will be compensated only after you submit the proof of transfer of the RC to the insurer.
The writer is Director – Motor Underwriting at ACKO Insurance