Buying a Used Car? How IDV, NCB and Insurance Transfer Work

When you buy a second-hand car, two things move from the seller to you: the registration and — if you choose — the insurance policy. Getting both done properly protects you from an unpleasant surprise at claim time.

How IDV is worked out for a used car

Age is counted from the car’s first registration, not from the date you bought it. So a car first registered three years and four months ago is in the 40% slab, no matter how recently it changed hands. The base is the ex-showroom price of that variant when new. If the model is discontinued, or the car is older than five years, the IDV is agreed with the insurer based on market value — see IDV for older vehicles.

The price you paid the seller does not change the IDV. If you paid more than the IDV for a well-kept car, you are carrying that difference yourself on theft or total loss.

Transferring the existing policy

Under the Motor Vehicles Act, the third-party cover on the car is deemed to transfer with it, and the new owner should apply to the insurer to record the transfer within 14 days. For the own-damage part, the insurer must endorse the policy in your name — until it does, an own-damage claim can be disputed.

Documents usually needed

• New RC in your name, or proof that the RTO transfer is in progress (sale deed and transfer forms submitted)
• Copy of the existing policy
• Proposal or transfer form from the insurer, with your KYC
• Seller’s consent / sale document and, if the car had a loan, the lender’s NOC
• Inspection of the car, if the insurer asks for one

What happens to the No Claim Bonus?

NCB is earned by the owner, not the car. The seller keeps it and can use it on their next vehicle with an NCB certificate. When the policy is transferred to you, the insurer generally charges you the NCB amount that had been discounted for the remaining policy period (“NCB recovery”). At the next renewal you start at 0% NCB and build your own.

Transfer or buy new?

Checks before you pay the seller

• Is the current policy valid, and is it comprehensive or third-party only?
• Is any external CNG kit endorsed on the RC and declared on the policy?
• Has the car had major claims? Ask the seller, and check the service history.
• Is there a loan hypothecation on the RC that needs to be removed?
• Is the PUC certificate valid? It is needed to drive legally and is often checked at renewal.

FAQs