So you have finally decided on a second hand car that you like. After lot of research and trying out dozens of cars, you have chosen the perfect used car to buy. After this starts the process of transferring the ownership and insurance in your name. It is very important to get the insurance transferred in your name because otherwise you will have problems when you need to make a claim. If you don’t get the insurance policy transferred, it sits invalid and going by the rule book, you won’t be able to make claims on it. Here are a couple of things that you need to know about the insurance of a used car.
Transferring the policy
Well first you need to make sure that the car you have finalised has got a valid insurance. Obviously the previous owner will produce the insurance policy along with other documents while you are in the process of buying the car. You can use the policy to verify if the seller has provided you the right information regarding the insurance claims made. You can simply call up the insurance company on their support number, tell them you need the claim history on the car as you are planning to buy the vehicle and provide them with the details from the policy. They will tell you about the claims made on this particular policy for the car. This would verify the condition of car as judged by you.
Now once you have made sure that you are okay with the claims made if any, you can go ahead with the transfer process. For this you will have to approach the insurance company along with the car and previous owner. They will provide you with a form of transfer. You have to get this signed by the previous owner and produce documents to support the transfer of ownership of vehicle. If the current owner is getting any no claim bonus advantage, you will have to pay the difference between actual cost of the policy and the cost being paid by the previous owner. Won’t be very steep for an old car as insured value goes down.
Saving with no claim bonus
While you would have to pay for the difference if the previous owner is getting any no claim bonus on the policy, you can also use that to your advantage. If you have a no claim bonus on your previous car, you can transfer it to this one and save money on the premium. It is surprising how so many people ignore the option of carrying their no claim bonus to their new vehicle. In case of high end vehicles, it can make quite a lot of difference as their insured values are high.
You will notice that there is an amount mentioned on the policy called the sum insured. An asset like car depreciates in its value with time. As the insured value goes down, the insurance premium also goes down. Sum insured is the current depreciated value of your car. It is what the car is worth of to the insurance company and in a way; you have paid the premium to insure a car of this particular value. This is the upper limit of sum that the insurance company is liable to pay you in case of some eventuality. While it isn’t a going to make a difference in the cost or process involved, it would give you an idea of how much the car is worth according to its age. This coupled with your own analysis of the car would help you get a justified price of the car. If you are planning to get a loan for buying the used car, this sum insured would be the approximate amount that the bank would be willing to lend you for your new used car.
So getting insurance on a used car is almost just as simple as it is on new car. It is just that on a new car the paperwork is handled by the dealer and all you have to do is drive your shiny new car home. In case of a used car, you have to take care of the processes yourself.
Are you looking to buy/sell one? Have a look at the latest pre-owned cars here.