There are many who buy a car or truck. Many prefer it to purchasing a brand new car because it saves them money. A used car makes an excellent value proposition for most people when compared with a brand new car. However, just like for a new car, a used one also needs insurance policy to support it. Additionally, it is important that both the buyer and seller of the vehicle knows about the insurance policy and it is conditions. If one neglects the terms related to the transfer of the insurance plan during a sale or purchase, it can get complicated and may incur additional expenses for both parties.
Interested to look at some crucial facets of an insurance plan in selling a used car? Then read on and be informed
1 – Ownership transfer:
While selling the car, the vendor should verify if the insurance plan continues to be transferred within the name from the vehicle buyer. On the other hand, the customer should observe that he/she gets a time period of 14 days a minimum of to get the insurance ownership.
Delaying may result in policy rejection, and the buyer will need to reapply for any policy afresh in that case. One more thing to note is the fact that any claims based on the policy aren't viable if the vehicle registration is not within the same address and name as given around the policy document. Ensure that you know about these IRDAI norms so that you can be prepared to get claims approved and never get rejected due to this one point.
2 – NCB claims:
Any claim free year results in additional bonus, which we term as No-claim bonus. This benefit can vary from 20-50% based on the quantity of claim-free years acquired. As the seller can transfer an insurance policy for any used car, the NCB is not transferable because it stays with the policyholder instead of with the policy.
It is interesting to notice that if the seller hasn't claimed any bonuses for a year, then that benefit is aggregated for later as he plans to purchase a new vehicle. In short, NCB stays using the policyholder rather than with the car.
3 – Policy period:
Another role of insurance policies, when transferring it towards the buyer, is that its margin can be adjusted in the cost of the vehicle. This factor is based on the date which the insurance policy was purchased. For example, if the seller buyers an insurance plan in January 2021 and sells the car around March 2021 to the buyer, then it is clear that the seller has already made the payment for the policy a minimum of for January 2021. This gives him the authority to add the cost of the rest of the premium months within the car's price.
Conclusion:
Buying or selling a second hand car requires better understanding of the documents that is included with when trading. Both the buyer and the seller ought to be full alert concerning the exchange of ownership and also the documents before proceeding.
