Understanding the process of transferring policy ownership for a commercial vehicle insurance policy is paramount whenever a vehicle is bought or sold. Many people limit themselves to transferring the RC and take the transfer of insurance casually. However, transferring the ownership of an insurance plan is equally important for legal protection.
Moreover, commercial vehicles serve business needs, so any insurance gap can lead to compliance issues and financial risks. That’s why both the seller and buyer must follow the right process.
Let’s break down the steps to change policy ownership for commercial vehicles while explaining how the process works in real situations.
How to Transfer Commercial Vehicle Insurance Ownership?
Here are the steps to transfer a commercial vehicle insurance policy:
Step 1: Initiate Vehicle Ownership Transfer at RTO
First, the buyer must become the legal owner of the vehicle for the insurance transfer to begin. Apply for the RC transfer at the nearest RTO using Forms 28, 29, and 30.
Submit all relevant documents, including the original RC, sale agreement, and ID/address proof of the buyer. You will receive an updated RC or a receipt confirming the ownership transfer upon processing, which is mandated for insurance endorsement.
Step 2: Notification to the Insurance Provider
Once the RC transfer process has started, the seller will need to inform the insurance company of the sale of the commercial vehicle. This can be done online through the insurer’s portal or at the branch.
In case early intimation is provided, the policy will get updated, and there will not be any coverage gap. The insurance company may also request details of the buyer, the reason for the transfer, and the date of the sale to proceed with the process.
Step 3: Retain Your No Claim Bonus
If the seller has an active NCB, they can retain it even after the vehicle is sold. One needs to ask for a certificate of retention of NCB from the insurer. This certificate enables them to transfer the accumulated NCB to a new policy on another commercial vehicle, thus helping to reduce future premiums.
Step 4: Submit Required Documents for Policy Transfer
Furnish the essential documents to the insurer in order to facilitate the commercial vehicle insurance transfer. Seamless paperwork ensures that the insurance company can legally endorse or issue a new policy in the buyer’s name.
Step 5: Vehicle Inspection
Some insurance companies may inspect the vehicle before the policy transfer, especially if the policy covers own damage. The vehicle’s quality, chassis/engine number, odometer reading, and modifications made are checked during the inspection.
It would allow the insurer to determine whether there has been a change in risk and modify the premium accordingly.
Step 6: Pay the Transfer Fee
After a successful vehicle inspection, you have to pay the transfer fee. Most insurance companies charge a nominal policy transfer fee. This step completes the formalities for acknowledging the transfer process.
Step 7: Receive Endorsement or New Policy
After verifying the documents and conducting any necessary inspections, the insurer updates the policy details, provided the fee is paid. The policy endorsement or issuance of a new policy confirms that the vehicle is now insured under the buyer’s name. The new policy will include:
- Updated owner details
- Revised RC information
- Nominee changes
- Any chosen add-ons or coverage modifications
This step formally completes the insurance transfer, ensuring uninterrupted coverage and legal compliance.
Documents Required When Transferring Commercial Vehicle Insurance Ownership
To transfer commercial vehicle insurance to a new owner, you must submit a transfer request to the vehicle insurance provider. Along with a transfer fee, the following documents must be provided for the commercial vehicle insurance transfer:
- A new copy of the registration certificate
- Form 30
- Form 29
- New application form
- Previous vehicle insurance policy documents
- No Objection Clause (NOC) from the former policyholder
- Inspection Report (to be conducted by the insurance company)
- The difference between the actual premium of the insurance policy and the amount after deducting the NCB.
Things to Remember When Transferring Commercial Vehicle Insurance Ownership
Here are the key points you need to consider when transferring a commercial vehicle insurance policy:
● Legal Requirement for Policy Transfer
Under the Motor Vehicles Act, the new buyer must take over the existing commercial vehicle insurance policy in their name after purchasing the vehicle. This ensures the vehicle has insurance cover under the right owner’s identity.
● Complete the Transfer Within 14 Days
The insurance policy transfer must be completed within 14 days of the date of sale. This period is crucial for ensuring there is no gap in coverage and that there are no legal or financial problems for the new owner.
● Automatic Third-Party Cover During the 14-Day Window
For the initial 14 days, the third-party liability cover is automatically granted in the name of the buyer. However, this advantage is available only if the transfer is initiated promptly and does not exceed 14 days.
● No Third-Party Cover After 14 Days if Transfer Isn’t Done
If the buyer does not finish the policy transfer within the specified time, the automatic third-party cover ceases to be effective. This leaves the vehicle uninsured under the law, exposing the owner to significant risks.
● Claim Validity During the Transfer Process
In case of an accident and a claim during the transfer period, the insurer will not deny the claim just because the policy is in the process of transfer. However, the insurance provider will only settle the claim after receiving the necessary proof of the policy transfer.
Transferring commercial vehicle insurance isn’t cumbersome if one knows the steps to change policy ownership. Genuine documentation, timely communication, and adherence to the procedures laid down by the insurer and the RTO will ensure a hassle-free transfer of commercial vehicle insurance for both the buyer and the seller.
As commercial vehicles involve greater risk, obtaining the proper transfer of insurance cover provides assurance and peace of mind. Proceed with the process meticulously, and you will never face any problem during claims or inspections.
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