Buying a Used Vehicle: How to Transfer Insurance and NCB

When you buy a used vehicle, the insurance policy must be transferred to your name. The Motor Vehicles Act gives 14 days to inform the insurer after the transfer. The seller's No Claim Bonus (NCB) does not go to you, because NCB belongs to the owner, not the vehicle.

Here is what both the buyer and the seller should do.

Why must insurance be transferred?

When a vehicle is sold, the registration changes to the new owner. The insurance must change too. If it stays in the old owner's name, a claim can face problems, because the person who owns the vehicle is not the person on the policy.

Remember that third-party insurance is compulsory for every vehicle on Indian roads. If the policy is not valid, you can face a fine of ₹2,000 and/or up to 3 months in jail for a first offence. So do not leave this step for later.

The 14-day rule

After the vehicle is transferred, the new owner should inform the insurer. The Motor Vehicles Act gives 14 days for this. The buyer should apply within the time allowed.

Do not wait until the last day. Start the process as soon as the sale papers are ready. If you delay, you may face trouble at the time of a claim.

What happens to NCB?

NCB (No Claim Bonus) is a discount on the own-damage premium for claim-free years. Usual slabs are 20% after 1 year, 25% after 2, 35% after 3, 45% after 4, and 50% after 5 or more claim-free years.

NCB belongs to the owner, not the vehicle. So:

• The seller's NCB does not go to the buyer.
• The seller can use the NCB on a new vehicle.
• The buyer starts fresh, unless the buyer has their own NCB from an earlier vehicle.

If you are the buyer and you had a vehicle before, ask your old insurer for proof of your NCB. You may be able to use it on the new policy. Read more on our no claim bonus page.

Steps for the buyer

Follow these steps after you buy a used vehicle.

1. Check that the seller has a valid policy and see the policy copy.
2. Collect the documents: RC with the transfer, sale papers, and the seller's ID.
3. Inform the insurer about the change of owner within 14 days.
4. Ask the insurer to transfer the policy to your name, or buy a new policy in your name.
5. Share your own ID and address proof, and your RC copy.
6. Pay any fee or premium difference, if asked.
7. Keep the new policy copy in your email and in the vehicle.

Documents can differ by insurer. Ask the insurer for the exact list. Our car insurance and bike insurance pages can help you start.

Steps for the seller

If you are the seller, do these things.

• Give the buyer a copy of the policy.
• Sign the papers needed for transfer.
• Ask your insurer how to keep your NCB. You can usually use it on a new vehicle if you renew or buy on time.
• Do not cancel the policy before the transfer is done, because the vehicle may be left uninsured.

Insurers usually allow renewal within about 90 days of expiry to keep NCB, but check your policy.

Check the policy before you buy the vehicle

A smart buyer checks the insurance status before paying. Ask for the policy copy and look at the end date. You can also check using the vehicle number on the insurer's website or app, or the government Vahan / Parivahan service. Our guide on how to check vehicle insurance status shows how.

If the policy has expired, the vehicle is uninsured from the next minute. The insurer may ask for an inspection before renewing it. In that case, plan for it before you take the vehicle on the road.

Choose the right cover for a used vehicle

For a used vehicle, think about these points.

• IDV (Insured Declared Value) is the market value of the vehicle agreed with the insurer. For a used vehicle it is roughly the maker's listed price minus depreciation for its age. It is the most you can get for total loss or theft.
• Third-party cover is the legal need. A comprehensive policy also covers your own vehicle.
• A zero depreciation add-on is usually for newer vehicles, often up to around 5 years old. Check insurer rules.
• Check for old unpaid claims or damage that is not repaired.

See comprehensive insurance for the full picture. If you are unsure, get a quote.

Common mistakes to avoid

• Not telling the insurer about the sale.
• Assuming the NCB comes with the vehicle.
• Using a private vehicle for commercial work on a private policy.
• Driving before checking that the policy is valid.
• Giving wrong or hidden facts about the vehicle's condition.

These can lead to claim rejection. For more help with mistakes, see our post on car insurance mistakes.

Rules and steps can change and differ by insurer. Your policy document is final.

FAQs

Can I use the seller's NCB on the vehicle I buy?

No. NCB belongs to the owner, not the vehicle. The seller can use it on a new vehicle.

What if I miss the 14-day limit?

Inform the insurer as soon as you can. A delay may cause problems at claim time, so do not wait.

Do I need a new policy or a transfer?

Either may be possible. Ask the insurer which is allowed and which suits you.

Is the old policy valid after the sale?

It may remain on paper, but it must be moved to the new owner. Do this within the allowed time.

This guide is for information only. Rules and policy terms can change, and the policy document is final. Please read your policy wording.