If you are going to buy used cars, you are not alone in the league. The second hand cars can save a huge amount of money, no doubt. When you are buying or selling used cars, insurance plays a great role. Understanding the terms and conditions of the insurance policy is very important for both the sellers and the buyers. You should also be aware of the discounts of the no claim bonus, the terms and conditions for transferring the policy. Both the sellers and the buyers can incur huge loss if all these points are overlooked.
Check Policy: The sellers must check whether the used car is being transferred in the name of the buyer or not. As soon as the insurance policy gets transferred, the seller should immediately claim the no claim bonus certificate, if any. This certificate refers to the bonus that is provided for not claiming every year. The bonus is generally calculated between 20-50% depending on the total number of the claim free years. The no-claim bonus is not a transferrable certificate from the seller to the buyer. So while selling; only the seller can claim it, and not the buyer.
Know The Limits: The maximum limit of the bonus is of 3 years. If any new policy is transferred within 3 years, the bonus of no claim can also be transferred. If you are switching the insurance company, you can also transfer the no claim bonus. Buyers should be aware that the ownership transfer of the policy should be done within 2 weeks after the purchase of the car. This will prevent you from the risk of the claim rejection. IRDA says that if the registration of the car and the insurance are not with the same address and name, the insurance claim will not be settled.
Transfer Of Insurance Policy: If the seller is willing for a transfer of the policy, he should convey his wish to the insurance company, in a writing mode of application. He will have to pay a nominal fee for the recovery of the pro-rata of the no-claim bonus starting from the transfer date to the expiration of the policy.
Motor Insurance Components: The insurance of the car generally includes components like :
If you possess the third party motor insurance or ‘liability only’ policy , then the coverage against the spoil of your car will not be provided. The ‘own damage’ policy will provide the expense of repairing of the damages to the vehicle or the expenses of replacing of any damaged parts of the vehicle.
Comprehensive policy or the package policy may include the cover of the own damage or the third party
While Buying Used Cars, Buyers Should Ensure:
The present condition of the car, whether it is in well running condition
The car does not possess any loans. If you are buying a car which possesses a loan, you may end up paying huge to the finance companies.
All the documents are directly from the seller and all of them are verified properly.
Sum Assured Calculation: The sum assured can be calculated by the declared value of the insured and the actual worth of the car. The present value and the value of the depreciation decide the final declared value of the insured.
Select The Insurance Company : You should know the features of the good insurance company before selecting finally. The proper motor insurance company should possess a huge network of various garages and the service stations that can provide the cashless services. Besides, the good insurance company should be well known in claiming the settlements very fast.
Premium Factors : The premium payable may vary from company to company. The premium is decided by factors like the cover of the personal accident, discounts offered, and different methods of estimating the declared value of the insured. The information provided in the car insurance policy should match with the information in the registration certificate of the vehicle. The information should include the type of the fuel, clearance certificate, type of the model etc.
For reducing the premium, some of the insurers try decreasing the declared value of the insured. In the short term, this can seem profitable for the policyholder as he will have to pay a low premium. But when the declared value is decreased, the sum assured will be decreased and the entire cost of the car will become low.
During the renewal of the policies, if no claims are made, the premium of the current year will be generally less than the last year. If the bonus of no claim has been obtained by the policyholder, the premium can be decreased depending on the conditions of the premium paid in the last year. So while buying the used cars, you should be careful about the forged documents.