We all love to own a vehicle. However, due to monetary constrains many of us might not be able to opt for a brand new car and in this case settle for a used car instead. In this case, people opt for a second hand car instead. Now, do not worry you are not the only one on this boat. With every passing day, more and more people are actually opting for a used car in order to save money. Now, there are a few factors that you need to keep in mind when you are looking for a second hand car. It is important to understand that insurance companies will play an important role in sale or purchase of used cars. Both the parties involved in this transaction needs to read through the car insurance policy with care to ensure that the terms and conditions in relation to the transfer of ownership are clearly written. Many aspects are involved in this like transfer of policy, no claim bonus status and so on. These are important factors that need to be ascertained with extra care.
Sellers Point of View
From the seller’s point of view, you need to check if the policy can be transferred to the new buyer or not. Also, if the policy has an add on feature of a no claim bonus then the seller must claim it from the Insurance company the moment the policy is transferred. Now, a no claim bonus is actually a reward that is given to the car insurance policy holders who did not make any claims in one year. This is like rewards to them and is offered as a rebate on the premium of the policy. This generally varies from 20 % to 50 % with the maximum ceiling being 50 %. Under no circumstance can the same be transferred to the new buyer.
Also, there are other clauses involved like a no claim bonus is only for a maximum period of three years. Moreover, this bonus feature can also be transferred from one insurance company to another.
Buyers Point of View
From the buyer’s point of view, it is important to take the ownership of a new insurance policy within a maximum period of 2 weeks from the date of purchase. Also, unless your car is registered in your name and also the car insurance policy is in the same name, no claim will be entertained as per IRDA guidelines. Hence, get the insurance component sorted as soon as possible.
Now, that we know the important aspects that both the buyer and the seller need to keep in mind let us go through the various other important factors that one needs to adhere to.
Transfer of Insurance policy
Now, there is a proper process involved in transferring an insurance policy. The seller generally needs to approach the car insurance company with the same in writing. There might even be a fee charged for the same. Now, every company has a different set of rules and regulations that one needs to abide by so please read through the same and keep yourself updated about the requirements.
Components of a Motor Insurance policy
Now, a car insurance policy has various features and components. Ensure, that you read through the same with extra care. A few policies have third party damage included, while others have own damage cover clause included. Some policies might have coverage against damage to own car while others might have coverage on liability to third party alone. These are critical aspects that need to be read through when you are changing ownership of car insurance.
Check on the Sum Assured
Now, we all know that car is a depreciable asset. So every single year the sum assured will be calculated depending on the actual worth of the car and the Insured declared value of the same. This also needs to be checked during the purchase of a second hand car as the value of the car will be depended on same.
Choose the right Insurance Company
There are many car insurance companies that are ready with insurance policies for you. The trick is to find one that matches your needs and requirements. Look for such a car insurance company that has a track of giving quick claims, has a huge network of cashless garages and has an easy settlement record. Go for the last few years track record to freeze on such a company and find the perfect solution to it. You can also ask your friends for a recommendation. Alternatively, you can long into the various websites that compare insurance features on the internet for you.
Check on the Premium
Premium is calculated taking into a plethora of factors like the maker of car, the age of the driver, the occupation of the driver, IDV and so on. It is important that you read through all the various features of the car insurance with extra care to ensure that you are paying the correct amount.
Keep the following in mind
You need to be adequately covered. It is better to be over covered than under covered.
The IDV needs to be established. Lowering the IDV might lead to lowering the premium but in the long run, it might cost you more.
The registration details need to be accurate
Add on features and riders come at a cost. So read through the extra features with care.
Check on the renewal dates also
Proper paper work in place
Check if any claim was made last year or not
Check on any pending tickets for last year or not.
There are various factors that both the buyer and seller need to keep in mind when dealing with car insurance policies while buying or selling a second hand car. These are important details and terms that need to be discussed in advance prior to the sale or purchase to ensure that both parties interest is safeguarded.