Spike in Used Car Purchases? Here’s What You Need to Know About Transferring Insurance

However, amid the excitement of choosing the right model and finalising the paperwork, one important step is often overlooked—transferring the insurance policy.

Why Insurance Transfer Is Non-Negotiable

Under the Motor Vehicles Act, it is mandatory that car ownership must be transferred to the new owner within 14 days of purchase. While the Act doesn’t explicitly penalise delays in updating the insurance, failing to transfer the policy can lead to own damage (OD) claim rejections because of mismatched ownership. This leaves the new owner financially vulnerable in the event of an accident.

“An untransferred insurance policy puts both the buyer and seller at risk. When making a claim, mismatched ownership details can effectively render the insurance void, as if there were no coverage at all.” –  Mallikarjun Mallannavar, Chief Claims Officer at Royal Sundaram

The Step-by-Step Transfer Process

Transferring car insurance is simpler than it sounds—and it’s one of the most important steps after buying or selling a car. Here's how you can do it:

Step 1: Inform the insurer

Notify the insurance company about the change in ownership as soon as the sale is complete.

Step 2: Gather the required documents

You will need the following documents:

• Form 29 and Form 30 (available from the RTO)

• Vehicle’s Registration Certificate (RC)

• Pollution Under Control (PUC) certificate

• Existing insurance policy documents

• No Objection Certificate (if the vehicle was financed)

Step 3: Submit the documents
Submit these documents to both the insurer and the Regional Transport Office (RTO).

Step 4: Vehicle inspection
Depending on the insurer, a quick vehicle inspection may be required.

Step 5: Pay the transfer fee
A small fee is charged to process the insurance transfer.

Step 6: Receive the updated policy
Once approved, the insurer will issue an updated policy in your name as the new policyholder.

What Happens If You Skip It?

Apart from legal penalties, you may find yourself without insurance cover in case of an accident. Third-party claims, although mandatory, may be delayed if policy details don’t match the ownership. The previous owner could also be dragged into legal complications if the car causes damage or injury after the sale.

“Failing to transfer the insurance can land the previous owner in legal trouble if the car is involved in an accident,” says –  Mallikarjun Mallannavar, Chief Claims Officer at Royal Sundaram. “That’s why transferring the policy isn’t just a formality—it’s a crucial legal safeguard.”

Final Thoughts

As more Indians opt for pre-owned vehicles, understanding the legal and financial implications of car insurance is crucial. Insurance transfer is not just paperwork—it’s a vital step to ensure continued protection. Whether you’re buying or selling, make sure the insurance is updated promptly to avoid complications later.