The market for second-hand cars is growing at a rapid pace. If you have decided to buy a second-hand car, then you are not alone. Used cars have become a favorite for many as they offer you the convenience you need and yet help you save money. However, you need to buy used car insurance to protect yourself from emergency situations like theft and traffic collisions. Here are the things to remember about car insurance while buying a second-hand car:
Valid insurance policy: Legally, insurance is compulsory for cars, so first check whether the car you wish to buy is insured or not. Sometimes the previous owners might not renew the insurance if they decided to sell the car. In that case, you have to buy a new insurance policy which will be an additional cost for you. If the previous owner does not have valid insurance,it becomes necessary to apply for a new insurance policy. As it is mandatory to have vehicle insurance,avoid driving without one. It is easy to apply for a car insurance policy, and you will usually get it within one or two days.
Check the expiry of insurance policy: If the insurance policy is about to expire in the near future or the vehicle does not have a valid insurance policy, you can bargain for the insurance expenses while buying the car. You can always ask the seller to deduct the price of the insurance policy if you are buying it, or ask the seller to buy a new insurance policy for the car. Insurance premium depends on the market value of the car. If the market value of the car is high, insurance can be a costly affair, so it is advised to ask the seller for insurance. If the vehicle has a valid insurance policy which has months to go before expiry, you will be in an advantageous situation as you won’t have to worry about buying a new policy soon.
Transfer of insurance policy: Other than affordability, transfer of insurance policy is an additional advantage of buying a second-hand car. You don’t necessarily have to buy new insurance,but you just have to transfer the ownership of the policy. It is important to have valid insurance on your name. If the registration certificate (RC) is transferred to your name but the insurance policy is still on the previous owner’s name then the insurance policy is not valid.So,don’t forget to transfer the insurance policy to your name at the time of buying a second-hand car.
Transferring of insurance policy should happen simultaneously with the transfer of registration certificate or ownership. The seller needs to inform the insurance company before selling the car and the buyer has to submit updated personal details. After receiving consent from seller and buyer, the Insurance Companywill transfer the policy inthe name of the buyer. Even if the policy gets transferred to the buyer’s name,the no claim bonus will remain on the previous owner’s name. The seller can use the no claim bonus while buying a new motor insurance policy and can save on the premium.
Many second-hand car buyers and sellersare not aware of the transfer of insurance and assume that the insurance policy on the previous owner’s name is still valid, which is not true. Without valid insurance, you will not be able to claim reimbursement in case of any mishap,so do not forget to transfer the insurance policy on your name within the permissible time frame.
Insured Declared Value
Insured Declared Value (IDV) is the maximum sum assured which is provided by the insurance company in case of theft or total loss of the vehicle. Usually, IDV is the current market value of the vehicle.But in some cases, the owner might declare the value of the vehicle to be lower than current market value, to save on the insurance premium. It is important to declare the actual market value in the insurance policy. If the previous owner has not declared the exact value of the car, then you might suffer in case of theft or total loss of the vehicle as you will get the compensation which is declared in the policy, and it will be lower than what you could have received if the actual vehicle value was declared.
Declaring a higher IDV is also not a good idea because then you have to pay a higher insurance premium. If nothing happens to the vehicle, you will end up paying more than what is required. Declaring higher IDV than current market value of the car may also result in rejection or delayed/limit claim settlement. So it is always better to declare an IDV which is close to the current market value of the car. Before buying a second-hand car do not forget to check the IDV.
Buying a used car is way more affordable than purchasing a new one, and can still make it easy for you to go wherever you want, whenever you want. But before buying a used car,make sure you only go with a reputed dealer and check all documents including the insurance policy to avoid future complications.