Car Insurance means financial protection given by the insurance company to the policyholder. There are mainly two parties involved in this agreement i.e. the policyholder and the insurer.
You are not the only one in this league if you are planning to buy a second-hand car. Purchasing a used or second-hand car is becoming a favorite choice for many to save money. Insurance has a big hand involved in buying or selling second-hand cars. Both sellers and buyers of the car need to understand when it comes to transferring the policy, retaining no claim bonus discounts on the insurance policy of the car, terms, and conditions. Not paying attention to these things can be costly and cumbersome for both the seller and the buyer.
The seller needs to check whether the policy is transferred to the buyer’s name. As soon as the policy gets transferred the certificate of No Claim Bonus should be claimed by the seller from the insurance company. No Claim Bonus here refers to the bonus opportunity which is provided to the policyholder if he/she had a claim-free year. The percentage of No Claim Bonus varies between 20 and 50% which is based on the number of claim-free years. The most important thing to notice here is that No Claim Bonus cannot be transferred by the seller to the purchaser or buyer.
Three years is the maximum limit or the deadline of No Claim Bonus. No Claim Bonus can be transferred to the new policy purchased within these three years only. But you can transfer your No Claim Bonus if you switch your insurance company.
The buyers must 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 want to avoid the risk of rejection of the claim. According to IRDA, if the insurance and registration of the vehicle are not having the same name and address, insurance claims will not be settled.
Transferring Insurance Policy
The seller has to convey this to his/her insurance company, that too in writing for transferring an insurance policy. The seller has to pay a very nominal fee along with the pro-rata recovery of the No Claim Bonus from the date of transfer until the policy expires for all the transferring process to happen.
Components of Motor Insurance
A motor insurance policy mainly includes:
- Package policy or comprehensive policy that includes the third-party or Own Damage Cover)
- In case of Liability, Only Policy or Third Party Motor Insurance Policy Coverage will not be provided against damage to your car. Own Damage (O.D) provides coverage against the expense of replacing the vehicle car or repair the damages to the vehicle car, on the other hand.
Calculation of Sum Assured
In a car insurance policy, the sum assured is calculated by the actual worth or current value of the car and IDV (Insured’s Declared Value). The IDV of the vehicle is decided by the Current value and the depreciation value of the car.
Selecting a Motor Insurance Company
A person should know the traits of a good company before selecting a car insurance company. A car insurance company is termed as “Good” when they know how to cover a huge network of service stations and garages which provides cashless services. In addition to that, the insurance company should also have a record of quick claim settlements.
Factors which affects Premium
The amount of car insurance premium paid varies from company to company. The amount of premium to be paid is decided by including different IDV estimation methodology, personal accident cover, discounts offered, etc. One of the most important things to take care of is that the information in your car insurance policy about the vehicle should be the same as mentioned on the registration certificate of your vehicle including clearance certificate, seating capacity, fuel type, and model type.
To reduce the premium, some insurers try to decrease the Insured’s Declared Value. This may be deemed as a profitable proposition idea in the short-term because the policyholder will have to pay a low amount of premium, but decreasing IDV will also decrease the sum assured at the time of the claim, as it decreases the total cost of your car.
The amount of premium payable on personal accident cover is approximately the same in all the insurance companies.
At the time of renewal
- The premium of the present year will be lesser than that of last year if no claim is made.
- The premium will be deducted according to the conditions as against the conditions of last year’s premium paid if No Claim Bonus is earned by the policyholder.