Second Hand Car Insurance

Isn’t it a proud thing to own a car; new or second-hand, a car is an important asset for all of us. We put in a lot of hard work and planning to buy a car and it is an important asset in our lives. And like we protect our family members it is equally important that we proactively do everything possible to protect our valuable assets and why shouldn’t we, we have earned it with hard work.

As you know, as per the Motor Vehicles Act 1988, driving any vehicle, new or second-hand, without at least third-party motor insurance is illegal. Apart from the legal mandate, having a motor insurance policy is also vital to secure yourself from possible mishaps.

When you decide to buy a second-hand car, there are several things that are essential to check. Make a checklist of all the documents/details you need to check from the first owner of the car and make a decision only when you are satisfied. One of these things is a car Insurance. Most of the buyers do not consider it as important, but this is what will eventually protect you and your pocket from any future loss.

So, before you reach out to any insurance company, go online and make the concepts simple for yourself and if you don’t know where to actually start from, read all about it here on Digit. We make insurance simple for you.

Seeing the current scenario, we all know we choose second-hand cars to save money. While we keep several factors in mind while purchasing one, insurance too plays a major role. Used car insurance holds equal importance as insurance of brand-new cars.

Thus, 2nd hand car insurance means a type of car insurance that covers old cars, second-hand cars, or used cars against damages due to accidents, calamities (natural/manmade), theft, etc. Also, car insurance for used cars offers the same coverage car insurance for new cars.

However, while buying a second-hand car you must always check the insurance history, it is better to have a look at the record of the insurance claims your now-to-be vehicle entails.

You can always call the insurance company your vehicle is insured with and verify the claim history if any. Buyers need to understand that it is important to transfer the ownership of the insurance policy in their name within two weeks of purchasing the car if you do not want to take the risk of getting a claim rejected. 

Is It Mandatory to Get Second Hand Car Insurance?

Yes, as per the Motor Tariff Act, after you buy a used car, it is mandatory to get the used insurance policy transferred to the new owner within 14 days of buying the car, failing which you will not be able to file claim.

Also, only third-party car insurance gets automatically transferred to the new owner for the first 14 days of buying the car, however, it does not apply to Standalone Own Damage car insurance.

The same reason we buy insurance for our brand-new cars is the reason why it is essential to get our second-hand car insured too. So, if your second-hand vehicle does not come with car insurance then you must pick one on your own, as it is mandatory and is generally a quick process. 

The most preferred policy for second-hand cars is a comprehensive insurance policy that can give you maximum coverage. You can get your car insured online quickly and efficiently within no time.

Compliance with Law

The main and most important reason to do insurance of old car is to comply with India’s motor law, as per which having at least third-party car insurance is mandatory. Driving without insurance can lead to penalties.

Financial Protection

Having car insurance for second hand car ensures financial protection in case of accidents, theft, or damage, thus saving you from significant out-of-pocket expenses.

Repair Costs

Used cars might be cheaper to repair, however, they can still contribute to extra costs. So, having 2nd hand car insurance helps cover these expenses, ensuring your car is fixed without putting any financial burden on you.

Covers Car Theft

Second-hand cars are often the targets for theft or vandalism and having second hand car insurance will cover the costs associated with these.

Peace of Mind

Knowing that your car is covered in case of unfortunate events provides you peace of mind.

Checkout: Car Insurance Premium Calculator - Calculate car insurance premium in simple steps

Most car owners will already have the insurance and if you are lucky, you may get the insurance policy with months still left before the renewal of the same. In that case, the easiest thing to do is to have the insurance papers transferred in your name along with the Registration transfer, if this is not done the insurance will be deemed invalid. 

Step 1 – Visit your respective RTO (Regional Transport Office) and submit the application for vehicle ownership transfer.

Step 2 – Submit all the relevant documents and pay the fees.

Step 3 – Once the RC transfer is done, you can contact the insurer for the insurance transfer.

Step 4 – Submit the new proposal form along with the relevant documents.

Step 5 – Pay the insurance transfer fees, and the insurance company will transfer the policy to your name.

Following documents will be needed for the transfer of insurance policy:

• Original Registration Certificate (RC) of the car with new buyer’s name

• Forms 29 and 30 that bears the sign of the previous owner

• Certificate of insurance

• A copy of the car policy

• The transfer fee and transfer of registration certificate

• New proposal form

• New copy of the registration certificate

• Old policy document

• No Objection Certificate from the previous policyholder

• No Claims Bonus difference amount, if any

Once this paperwork is done and the appropriate fee is paid, the insurance company will get to the work and transfer the car insurance into the new owner’s name.

After doing all the paperwork make sure to check your name on the Insurance as well as the RC and also note that here, you being the new owner will have to pay any NCB No Claim Bonus difference, since NCB will remain with old owner and new NCB will be applicable for you. It is important to note that the RC and the insurance document should have the same owner.

Pro Tip - For those of you planning to sell their car, we have some important information for you too. Always remember when selling your car to a new owner, your NCB still stays with you, as NCB is applied only on the driver and not on the car. You can utilize the NCB on a new policy bought within 3 years.

NCB can be transferred while changing the vehicle or the insurer as NCB depends on the driver. The NCB rates are fixed, it ranges from 20% to 50% from 1 to 5 years. It becomes constant after 50% and that’s called NCB sunset clause. All add-ons except Road Side Assistance Cover and Tyre Protection take a hit on the NCB if claimed for, as all of them do affect the base policy and are considered as a claim.

Here are some common factors that affect second hand car insurance price:

Age and Condition

The make, model, age and condition of the used car is important in determining the old car insurance price as older cars or those in poor condition may fetch higher premium because they are at a higher risk of breakdowns and repairs.

IDV

The current market value of the car or its Insured Declared Value also affects the premium amount. The higher the IDV of the car, the higher the premium.

Distance Driven

The more the second hand car is driven the higher will be its wear and tear and the higher its premium.

Driving History

A clean driving record can lower the second hand car insurance price, whereas if the used hand car has a history of accidents or traffic violations, its premium will be higher.

Insurance Plan Chosen

The type of car insurance coverage and add-ons chosen also directly impact the second hand car insurance premium.

Here are some easy tips to help you reduce old car insurance price:

Compare Quotes

Compare second hand car insurance price quotes online from multiple insurers to get the best insurance price and benefits.

Appropriate Insurance Plan and Add-ons

If your second hand car is quite old, you can consider getting only a third-party policy instead of comprehensive policy as the car's value is low. Also, choose only the required add-ons as they increase your premium.

Maintain a Clean Driving Record

Safe driving can earn you discount on premium such as No Claim Bonus.

Before doing insurance of old car, remember to check the following things:

Car’s Depreciation

The first thing is to evaluate your car’s condition and determine its current market value of the used car. As the value of second-hand car depreciates with each year car’s IDV also changes.

Transfer Ownership

After buying a second hand car and verifying the owner, transfer the ownership of the car in your name before you go to buy car insurance for used cars.

Compare Quotes

Before buying insurance for a 2nd hand car, head to the websites of different insurance companies and compare insurance plans offered by them.

Add-ons Available

It's better to talk to your car insurance provider about the add-ons available for used car insurance plans before buying the policy, as it will enhance your coverage.

Claim History

Always check beforehand if the second hand that you’ve bought has been involved in any accidents or has had major repairs or has filed any claims, as this can affect your No Claim Bonus (NCB).