All You Need To Know About Used Car Insurance

As per the CARS24-IPSOS report, around 5 million second-hand cars or used cars are being sold in India every year. This segment is currently booming due to its affordability. As a result, used cars are available at lower prices compared to new cars of the same model.

Nevertheless, individuals purchasing a second-hand car should factor in the risks and damages it is susceptible to from accidents. Considering this, they must obtain used car insurance from a reputed insurer. Such car insurance is meant explicitly for second-hand cars.

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Essential things to know about second-hand car insurance

Similar to a standard car insurance policy, insurance for second-hand cars offer coverage benefits and protects an owner’s pockets from financial losses during an accident. It covers both third-party and own car damages. In addition, one can choose a comprehensive insurance plan for an extended coverage limit. However, these plans are available at higher policy premiums.

Furthermore, as it is mandatory to obtain car insurance even for a second-hand car, purchasing one becomes paramount. According to the Motor Vehicles Act, 1988, car owners must get insurance to avoid hefty traffic penalties.

The Insured Declared Value of a used car is less than that of a new one. As car insurance premiums depend on the IDV of a vehicle, it is apparent that second-hand insurance policies come at a lower premium. Such an insurance policy becomes an essential tool as old cars do not come with proper anti-theft devices. So, obtaining insurance provides coverage during thefts.

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Reasons to opt for used car insurance

Second-hand car insurance comes with several lucrative benefits. Individuals wondering why it is vital to opt for this insurance can follow the below-mentioned pointers:

Legally mandatory

Second-hand car owners should at least possess a third-party policy to avoid considerable fines in the future if they are caught driving without it. Additionally, a third-party insurance plan provides coverage against damages caused to a third-party person, property, or vehicle by a used car. Bearing the cost of these damages can increase an individual’s financial burden. Thus, obtaining this insurance also reduces third-party liabilities after an unfortunate event.

• Comprehensive coverage

There might be instances when a second-hand car incurs damages from natural or artificial

disasters. An owner would need more than a third-party policy to get coverage benefits in such a scenario. Comprehensive insurance is vital as it provides a range of benefits and covers these damage repair costs. Hence, comprehensive insurance policyholders can reduce their financial burden and save a substantial amount for future expenses.

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Financial security

Well-rounded insurance for a used car provides financial security in case of accidents. There might be litigation issues arising from a third-party accident increasing an owner’s liability. In that case, a third-party policy takes care of the situation and provides security. If an individual does not possess such a plan, it can put a financial strain on him during third-party accidents, especially in case of death.

Easy claim settlements

Policyholders of second-hand insurance can enjoy cashless repairs from a range of network garages across India. Under this facility, one does not need to bear out-of-pocket expenses for car damage repairs as the insurer settles the amount directly with the repair centre. Further, some insurers offer technology-driven claim processes that allow individuals to file claims from a smartphone. Hence, policyholders can expect seam claim settlement by opting for a second-hand insurance plan.

Security in case of thefts

In case of car theft, a policyholder would receive a substantial amount under a good insurance plan for a used car. By utilising this lump sum, one can get car damage repairs from professional garages without hassle.

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About transfer of car insurance

While purchasing a second-hand car, one must ensure whether or not the previous owner possesses a valid insurance plan. If an insurance policy exists, buyers must transfer the plan

under their name. Here is the procedure to follow for transferring second-hand insurance from a seller to a buyer:

Firstly, one must inform the insurance company regarding the change of ownership.

If the previous owner does not have accumulated No Claim Bonuses, the insurer will issue a new NCB certificate to the seller before transferring the policy.

The current owner needs to furnish the following documents for a policy transfer:

  • Updated RC book
  • NOC from the seller
  • Existing policy bond
  • New insurance proposal form
  • Inspection report of a car
  • Amount of difference premium payable

Note: One can calculate the premium payable towards a policy by using a car insurance premium calculator. This calculator is available online and is easy to use. It fetches details regarding policy premium in a short span.

About buying a new insurance policy for a used car

If the previous owner does not possess a valid insurance plan or the current second-hand car owner does not wish to opt for policy transfer, a second-hand car owner can always purchase a new insurance policy. He or she can buy new insurance for a used car online or offline from a reputable insurance company.

One needs to inform the insurer for offline purchase and visit the branch for a new insurance application. However, the online procedure is much more convenient as an individual only needs to visit the insurer’s website and enter essential details to buy a new plan.

Before purchasing a new insurance plan for a second-hand car, one must use a premium calculator to compare different insurance policies from various companies. This will allow individuals to choose the best insurance for a second-hand car. Further, knowing everything about second-hand car insurance is essential for a seamless experience, and the aforementioned section can be a good start to that.

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