June 22, 2024
New Delhi
Finance Insurance

How To Transfer Car Insurance to New Owner?

transfer Car Insurance to New Owner

Transferring a car insurance policy is important for both the buyer and the seller of the car. You must transfer your insurance coverage to the new owner of your car within 14 days after selling it, as required by Section 157 of the Motor Car Act. 

An automobile insurance policy must be transferred to the new owner in order for the insurer to pay for financial losses brought on by third-party or personal injury claims. If the new owner causes an accident, the court may issue you a legal notice requiring you to compensate the third party for the loss they suffered.

Read: What is CPA Coverage in Car Insurance?

Read: How to Claim Car Insurance For Your Own Damage

What Is a Car Insurance Transfer?

It is essentially a procedure that allows one person to give another person ownership of a car that has already been registered to someone else. During this procedure, the buyer’s name will be included on the registration certificate in place of yours.

1- From The Buyer’s Perspective: the insurance policy must precisely match the name and address that are listed on the vehicle’s registration certificate. If you are in an automobile accident and file a claim with your insurance company, it may reject your claim if the insurance policy has not been transferred into your name.

2- From The Seller’s Perspective: if the person to whom you sold the car gets involved in an accident, the law can make you legally responsible for repairing the losses a third party may have incurred as a result of the new car owner.

It is your responsibility to make sure the new owner’s name is added to the four-wheeler insurance policy when you sell your car. In the same way, if you’re buying a second-hand automobile, be sure the former owner transfers the existing auto insurance coverage to you.

Once another party has given their approval, a car insurance transfer formally terminates one party’s participation in an insurance policy agreement. Notably, both parties must transfer auto insurance policies within 14 days after acquisition, as required by Section 157 of the Motor Vehicles Act.

Need for Car Insurance Transfer of a Vehicle.

After buying a second-hand car from someone, ownership and insurance are transferred to the new buyer. In this case, after the sale of the vehicle, first of all, you must ensure that ownership is transferred. In this case, the registration certificate’s original owner’s name will be replaced by the name of the new owner.

Transferring the car insurance policy is necessary for the following reasons:

  • In order to avoid any potential liabilities, because the previous owner did not transfer the policy into your name, you are not able to make a third-party claim if an accident involving your used automobile results in third-party liabilities. As a result, it will be up to you to pay off your third-party debts.
  • To Maintain Your No Claims Bonus: From the perspective of a seller, the No Claim Bonus is crucial. Policyholders who are responsible and have not made a claim within a calendar year are rewarded with a no-claim bonus.
  • Legal compliance: In India, having automobile insurance is a necessity. However, since you no longer own the car, the insurance is no longer applicable when you sell it.
  • The buyer’s protection: The new owner is shielded from third-party obligations, mishaps, and potential damage by transferring car insurance.
  • Insurance advantages that continue: If you transfer your auto insurance, the new policyholder will be able to take advantage of the same perks. Additionally, future renewal premiums can be lower as a result of this.
  • Compliance with the lender: Lending institutions expect you to update your information if the ownership of the vehicle changes in any way.

Documents Needed to Transfer Car Insurance

When purchasing a used car, it’s crucial to obtain the appropriate papers for the title transfer process before beginning. The following papers are required for transferring auto insurance, along with a transfer fee:

  • Registration certificate: Make sure you have the original copy of the registration certificate (RC) for the car.
  • Car insurance: Ask the seller for the original insurance policy document.
  • Old Vehicle Insurance Policy Documents and New Registration Certificate/Form 29
  • No Objection Clause (NOC) of the former policyholder
  • Address Verification: Provide a genuine buyer’s address verification document.
  • Passport-sized pictures of the buyer should be included.
  • Insurance Company Inspection Report: In some circumstances, the insurance provider may demand a vehicle inspection report. The insurance provider normally compiles this report to evaluate the state of the car and determine if it is insurable.

How To Transfer Car Insurance to a New Owner

When you transfer ownership of a car, you must also change the insurance policy’s owner to your name. It is recommended that the purchaser take the initiative to confirm that a motor insurance policy protects the vehicle.

However, in accordance with the rules established by the transport division, it is the seller’s duty to make the transfer of the buyer’s auto insurance as simple as possible. Car insurance transfers typically involve no complicated steps.

  • You can submit an application for a car insurance name change along with the other documents if your Regional Transport Office (RTO) permits ownership transfers on the registration certificate.
  • Any insurance provider, however, would only pay claims if they were able to get the transfer of registration certificate. Therefore, as soon as you get a new RC, you must email it to the insurance provider.
  • After you have done the needed paperwork, take the following actions to change the name on the car insurance policy:
  • Download Forms 28, 29, and 30 by visiting the website or office of the relevant Regional Transport Office (RTO).
  • Complete the forms completely and with all the relevant information. Don’t forget to provide the specifics of the vehicle as well as your contact information.
  • Send these forms, along with any necessary extra documentation (if any), to the nearby RTO. It is best to check the prerequisites in advance, as these additional documents may differ based on your particular RTO.
  • When you submit the paperwork, the RTO will process your forms and issue a clearance certificate. This certificate acts as evidence of the transaction’s validity and compliance with all legal requirements.
  • Bring the clearance certificate and all pertinent paperwork to the insurance provider who provided the policy. To start the transfer process, they will need these papers.
  • Make sure to pay any transfer-related costs to the insurance provider in accordance with their instructions, if there are any.
  • You will get the insurance coverage in your name after completing the required procedures and paying any expenses. You may receive the policy paper by email or have it delivered to your home by a courier service.


From the seller’s perspective, transferring auto insurance is crucial. This is because you may be required by law to make up for the losses incurred by the third party, even if the new automobile owner is at fault for the collision.

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