Transferring insurance coverage to the new buyer is a mandatory responsibility when selling a two-wheeler. The transport department requires sellers to move insurance coverage to buyers whenever they sell a two-wheeler and provide the Registration Certificate. Failure to transfer insurance correctly will produce legal issues and financial responsibilities.
This blog post provides directions about two-wheeler insurance transfers, appropriate documents, and an explanation of the risks associated with incomplete transfers.
Importance of Bike Insurance Transfer
Before diving into the transfer process, let’s first understand why a two wheeler insurance transfer is necessary:
- Without the transfer, the new owner will not have adequate insurance coverage on third-party liabilities or bike damages, which will expose them to major financial risks.
- As the previous owner, you can still be held legally responsible for any accidents/damages caused by the new owner before the policy is transferred.
- Delayed transfer beyond 14 days is considered a breach of law and can attract penalties.
- Transferring the policy ensures continuity of benefits like No Claim Bonus (NCB) for the new owner.
Thus, promptly completing the insurance transfer protects the interests of both the buyer and you as the seller. Now, let’s see the detailed process for this.
Process for Transferring Bike Insurance
Once the ownership transfer of the bike is completed, follow these steps to transfer the insurance:
Step 1: Intimate the RTO
Begin by submitting Forms 29 and 30 to the RTO, informing them regarding the bike sale and ownership change. Receive their confirmation after they amend their vehicle records.
Step 2: Notify Insurance Provider
Next, contact your insurer and tell them about the transaction and need to change the policy name. Share relevant particulars like policy number, RTO confirmation of ownership switch, new owner contact details, etc.
Step 3: Conduct Vehicle Inspection
The insurance agency will initiate the transfer work and inspect the bike to evaluate its current condition. This will decide whether a revision in Insured Declared Value (IDV) is warranted or whether an extra premium must be paid.
Step 4: Clear Outstanding Premiums
Based on the inspection, both parties mutually determine an agreeable IDV. You or the buyer clear any applicable administration fees or additional premium claimed by the insurer for the policy transfer.
Step 5: Obtain Transferred Policy
Finally, the insurance firm will endorse the policy in the new owner’s name and may provide an updated Certificate of Insurance, finishing the two-wheeler insurance shift process.
The standard turnaround is 7 to 10 days if all paperwork is readily furnished.
What Happens if the Insurance Transfer is Not Completed?
Under Section 157 of the Motor Vehicles Act, the seller must transfer the insurance within 14 days of selling the bike. If the insurance remains in the seller’s name, the following issues may arise:
- Legal Responsibility for Accidents: If the new owner is involved in an accident, the seller could still be held liable for third-party damages.
- Denial of Claims: The insurance provider may refuse to honor claims if the ownership and policy are not aligned.
- No No-Claim Bonus for Seller: The previous owner will not be able to use their NCB for future insurance policies.
Other Important Points
Here are some other things to remember:
- Collect the pending No Claim Bonus (NCB) from your insurer before transferring the lapsed policy. The entire NCB can be passed on to the new owner.
- Both third-party liability cover and own damage cover get transferred. No need to take a new policy.
- Administrative fees and inspection charges may apply.
- Keep copies of all transfer documents and the updated policy for future reference.
Once transferred, the previous owner’s liabilities legally end. The new buyer gets full control.
Overall, new bike owners must insist on a valid transferred insurance policy from the seller to enjoy continuous coverage. Sellers should prioritize prompt insurance transfers after the ownership change.
What if the Bike is Financed?
If your bike is financed and has an ongoing loan, the insurance transfer process becomes slightly more complicated. The lender will likely hold the original registration and the insurance documents until the loan is fully paid off.
In this case, the bank or the financial institution needs to be informed of the transfer. The buyer must also provide the bank’s NOC (No Objection Certificate) to facilitate the transfer. In most cases, the bank will transfer the insurance policy to the buyer once the loan is settled.
Conclusion
It is extremely vital for sellers to transfer their active two-wheeler insurance policy when they sell their bike to a new owner. Following proper transfer protocols protects against insurance gaps for the new buyer while simultaneously absolving the previous owner of future legal liabilities. It also enables continuity of benefits like NCB for the new owner.
For a smooth transition, both parties should proactively coordinate the transfer process and complete it within 14 days of the sale. This detailed guide sums up all the key steps and considerations for seamlessly transferring bike insurance and ownership documents.
