How to Transfer Vehicle Insurance to New Owner

When you buy or sell a used vehicle in India, the existing insurance policy can be transferred to the new owner for the remaining policy period. This is governed by Section 157 of the Motor Vehicles Act 1988 and IRDAI guidelines. The transfer protects the buyer from driving uninsured during the transition and ensures continuous coverage. However, the NCB does not transfer with the policy — it stays with the seller. Here is how the transfer works from both the buyer and seller perspectives.

Why Insurance Transfer Is Important

Until the insurance policy is transferred to the new owner name, any claim filed may face complications. The insurer can question the insurable interest if the policyholder and the vehicle owner are different people. Both the seller and the buyer have a legal obligation to notify the insurer within 14 days of the ownership transfer.

If the seller policy has expired or the remaining period is too short, the buyer should purchase a fresh policy immediately rather than relying on a transfer.

The Transfer Process

The buyer (new owner) needs to contact the insurer with the transfer documents. The insurer updates the policyholder name and issues an endorsement on the existing policy. The coverage continues as before for the remaining policy period. At renewal, the buyer can choose to continue with the same insurer or switch to a different one.

• Buyer contacts the insurer (phone, email, or branch visit)
• Submits transfer documents (RC, sale deed, old policy copy)
• Insurer verifies documents and processes the endorsement
• Updated policy endorsement is issued in the buyer name
• Premium adjustment may apply if the buyer risk profile differs

NCB Does Not Transfer With the Vehicle

A critical point that many buyers and sellers misunderstand — the No Claim Bonus belongs to the policyholder (seller), not the vehicle. When the policy is transferred to the buyer, the NCB is stripped from the policy. The buyer starts with zero NCB on the transferred policy. The seller can carry their accumulated NCB to their next vehicle policy.

This means the buyer should expect the next renewal premium to be higher than what the seller was paying, since there will be no NCB discount.

Documents Required

• RC Transfer Receipt — Proof that RC has been transferred or applied for transfer at the RTO
• Sale Deed / Agreement — Document proving the vehicle sale transaction
• Previous Insurance Policy — Copy of the existing policy being transferred
• Buyer ID and Address Proof — Aadhaar card, passport, or other valid ID of the new owner
• Transfer Request Letter — Written request for policy transfer to the insurer

Steps to Transfer Vehicle Insurance

1. Complete RC transfer at RTO: Initiate or complete the ownership transfer at the RTO first
2. Contact the insurer: Buyer contacts the existing insurer via phone, email, or branch visit
3. Submit transfer documents: Provide RC transfer receipt, sale deed, old policy copy, and buyer ID proof
4. Insurer processes endorsement: The insurer updates the policyholder name and issues an endorsement
5. Receive updated policy: The buyer receives the policy document with their name as the new policyholder

Frequently Asked Questions

Conclusion

Transferring vehicle insurance during a sale is a simple but important step that protects both buyer and seller. Complete the process within 14 days, understand that NCB stays with the seller, and keep documentation organised. For the buyer, verifying the existing insurance status before purchase is a smart due diligence step that can prevent unpleasant surprises.