The numbers say it all. Last year India’s used car market saw sales of 40 lakh vehicles , which outpaced new car market by a whooping margin of 4 lakh vehicles. However, as with new vehicles, motor insurance for second-hand cars has become more important than ever. While the onus is on you to get the insurance transferred, you can also buy a standalone motor insurance for a used vehicle.
Need for motor insurance for a used vehicleWhile the cost of maintaining a used car is more predictable than a new one, the risks it faces on the road are not. Motor insurance can insulate you from these risks. Here’s how:
● Third-party liability: If a third party suffers physical injury or damages, you could be held legally liable. To drive on Indian roads, third party liability insurance is mandatory for all vehicles.
● Theft: As a car owner, you’d be well aware of the rising instances of car theft. According to data published by the Mumbai police, car theft has among the least resolution rates. Buying motor insurance is a wise decision to make, in addition to installing alarms and anti-theft GPS trackers.
● Natural calamities: Floods, earthquakes, landslides, rockslides are common and cannot be predicted. In the event of a calamity, motor insurance can compensate you for any damages that your vehicle may sustain.
● Man-made calamities: Riots, war and arson can cause widespread destruction and your vehicle may also become a casualty. With motor insurance, you can hedge against losses arising from such events.
● Depreciation protection: With a lower Insured Declared Value (IDV), a second-hand vehicle’s value declines at an accelerated rate, especially if it is more than 5 years old. Depreciation protection can help you get a better resale value, if you decide to replace it with a new car in the future.
Things to keep in mind while insuring a used carWhile buying a used car, always ensure that its ownership is transferred to you. Here are a few things that you will also need to take into account when buying a used car.
With the ownership of your second-hand vehicle transferred to your name, any existing insurance cover needs to be transferred as well.
Verify the claim history
Contact the insurer to verify the claim history of the ex-owner of your vehicle. This will help you continue to get the benefits of insurance on your vehicle. However, NCB benefit is not transferable to the new owner, under the terms of motor insurance.
Make sure to get all the required documents such as registration certificate, affidavit of sale, etc., from the ex-owner as you might need while transferring/buying insurance.
Click here to apply for a motor insurance.
The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.
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