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-   -   Car Insurance - Possible NCB (No Claim Bonus) Loophole? (https://www.team-bhp.com/forum/indian-car-loans-insurance/66716-car-insurance-possible-ncb-no-claim-bonus-loophole-4.html)

If the buyer has transferred the Insurance to his name, he would have paid the NCB discount(prorated) that you got on the insurance. You can take the transferred insurance copy and get the NCB basis that.

If he has got a new insurance policy issued in his name, then you can cancel the current policy in your name to get a prorated refund amount for the remaining days of policy as well as NCB certificate.

This is pretty much confusing to me. For ex - My old car's insurance is due only during sept 2015. And if sell this car during Jan 2015, I can show the details of sale transaction and get the NCB letter which i can use for my new car's NCB.

Now how can I get refund for the proportionate insurance that I have paid for the old car?

You wont get the Insurance premium paid for the policy year refunded back to you. All you get is the NCB letter provided you return back the NCB amount claimed during renewal but on prorata basis. The best you can do is transfer the Insurance policy in the new owner's name and ask the new owner to pay for the NCB amount you would have to return. This way he would get the Insurance for the car at a meagre amount.

Once you get the NCB letter, use it to buy Insurance for your new vehicle.

Agreed but the buyer will not agree for the same right? Because he will end up paying the NCB that I have claimed. Further will he pay to me anything? No I don't think so.

For ex My existing car insurance premium is Rs. 7900 out of which the NCB is Rs. 4500 (45%). The due date for next renewal is Sept 2015.

Suppose if i sell my car during Dec 2015 end then, I will get the NCB letter for 45% which i can use it for my new car and for getting the NCB letter, I will have to pay Rs. 4500/12*4= Rs. 1500 (Renewal month sept to car sales during dec 2014) and the new owner will end up paying Rs. 3000 (Rs. 4500-1500).

Am I right?

Yes the new owner will pay Rs 3000/- back to the old Insurance co but on your behalf when transferring the Insurance ownership to himself. He anyways will not be eligible for NCB which you have claimed. So ideally an Insurance of Rs 7900 is being made available to him at Rs 3000/- since the Insurance premium already paid for the year. This arrangement is purely on the basis on negotiations during the car sale. Either you pay or new owner pays on your behalf.

Let me Explain with Example
Consider Below :
Policy Issue Date: 1-Apr-14
Policy Expiry Date: 31-Mar-15
Actual Insurance Amount : 10000
Policy days: 365
NCB: 50%
Premium Amount(Less NCB 50% discount) : 5000

Now Consider Below:
Car Sell date: 31-Dec-14
Total Elapsed Days: 275 (01-Apr to 31-Dec)
Total Policy Consumed: 3767.12 ([Premium Amount/Policy Days]*Total Elapsed Days i.e [5000/365]*275 )
Remaining Amount : 1232.88 (Premium Amount-Total Policy Consumed)

Now if you sell the car
1. Without Insurance (i.e cancel the current insurance)
- you will get refund of Remaining amount (1232.88) + NCB letter of 50%
2. With Insurance
- you will get NCB letter of 50% (the other party should transfer the insurance in their name + you will need the car sell letter)
- other Party will need to pay additional 1232.88 ([50% NCB discount that you got/365]*Number of calendar days remaining for the policy i.e [5000/365]*90) + maybe insurance transfer fees of Rs 100-200

Hope this would clarify

Point 1: Not possible. No Insurance co will refund the premium paid on pro rata basis.
Point 2: Only possible in case the buyer agrees to pay or else it will be seller who has to refund the money back to the Insurer.

Ghodlur, I have been through both the cases & from my experience
Point 1: Please visit the Insurance company Office for cancelling the insurance along with the car sale letter and the new RC book copy showing the name of the new owner of the car and you will get the refund & NCB letter.
Point 2: Best to get this clear during sale process. If the buyer wants to transfer the insurance then he would have to pay the difference to insurance company due to the NCB that you were receiving for the remaining policy period or if he has NCB then he can utilize the same. This is how all insurance transfer during sale works. No Seller would pay for buyer to transfer the insurance.

Does the buyer really have a choice here? I thought the insurance would be invalid the moment the ownership changes in RC, till the same change is reflected in the insurance document. I was told that any claim during this period where the ownership doesn't match with insurance document could be rejected by the insurance company. Is that not the case?

I have transferred the car insurance to my name twice - once when my dad was buying a new car and transferred old car's ownership to me and the second time was when my Swift got transferred to my name after the company lease was over. In both cases, we were asked to change the ownership in insurance document immediately after the ownership transfer was reflected in the RC.

To avoid this very issue of Insurer rejecting the claims during the transfer period, it is always better to submit the documents (same set ideally) to the Insurer parallely when the documents are being submitted to the RTO for transfer of ownership. This way the Insurer is informed of the Insurance ownership transfer and in case of any claims, same can be honoured by the Insurer. In ideal conditions, the car sold is to be handed over to the new owner when all of the procedures (RC and Insurance transfer) are completed. But then that rarely happens.

That is not possible, Insurance company can not amend details before RTO updates RC (or issues "ownership particulars" form while new RC is being issued).

It is better for buyer to purchase new cover note and get refund for existing policy.

Thanks for such a detailed information.

I have sold the car a couple of days back. I have 45% NCB for my old car. I have the photo copies of form 29, 30, delivery note and sale receipt along with the id proof of the purchaser.

Now my old car insurance company is not ready to give me the ncb letter without the proof that the car is transferred in the purchaser's name (RC copy in the purchaser's name). They are not ok with the form 29, 30 and other documents mentioned above. They say it is IRDA norms and they cannot help.

I am in a hurry to get the ncb letter so that I can utilize it for my new car purchase. I didnt get any proper information from my Insurer Future Generalli so I approached a friend who works in Bajaj Alianz I got to understand that if i opt to get the ncb letter now, I will have to pay the ncb claimed by me ie.., from today till the expiry of the policy and then only the ncb letter will be issued. Another option will be to just keep quiet till the car is actually transferred in the name of the purchaser and then hand over the copy of new RC in the name of the purchaser. At that point of time, I will not have to pay anything. The ncb letter will be issued to me free of cost.

Is this piece of information correct? Should i really wait till the car is transferred in the name of the purchaser?

One more tricky thing is that do i need to wait till the insurance is transferred in the name of the purchaser so that he would have paid the ncb for the remaining period? Effect is that I need not pay anything!!

rki2007,
In my case,
- I bought a Honda City on 27 Jan 2014 & sold my Getz in April 2014.
- The transferred RC copy of Getz had the date of transfer (26 April 2014).
- Post this I approached the United India Insurance for NCB letter sometime towards end of May.
- Had to submit just the photocopy of the RC with transfer to new owner.
- Was issued the letter on the same day with 50% NCB and also stating the validity of 3 years from 26 April 2014
- I gave this letter in original to Honda Assure Team sometime in June. (Had to followup with them as the insurance team at showroom misplaced the papers). In July Got the refund check processed with calculations from the date of RC transfer of 26 April 2014 (and not the date Honda processed the letter or the date when United India Insurance issued the letter) for the remaining period of policy.

- In your case if in hurry probably you should ask them to cancel the insurance of your old car basis the forms which they should be ok with(since there is no compulsion on buyer to take the same insurance. he may opt for some other provider) and once cancelled they can issue the NCB letter. (If you have not committed to the buyer about the insurance, else he may come back to you if he tries to transfer the insurance later). Also there is no need to wait for the other person to transfer the insurance. Once he has transferred with RC updated you are set to get the NCB letter with that photocopy

Hope this helps.

Hi Gurujan,

I recently sold my i20 to a fellow TBhp member and have been chasing bajaj allianz to transfer the insurance in his name. I have already shared the delivery note and copy of re-registered certificate of the vehicle with them.
Further, I have a 45% NCB accumulated over last 4 years and hence I should be getting a NCB certificate from bajaj allianz in that case. To my sheer surprize, bajaj allianz has asked me to pay a NCB recovery amount of INR 4572 in order to issue the NCB cerificate. In fact I had renewed my i20's insurance from Bajaj allianz last year in OCT'16 by paying around INR 9000. Can you guys guide me here, what is going wrong. Is one supposed to pay such a high NCB Recovery fee juat to obatin a NCB cerificate?

Thanks in advance.

It may seem high to you but I think the calculation is on pro rata basis since the car was sold mid policy year. When you renewed the policy, you claimed NCB amount which is valid for one policy year period. If the car is sold in between the year, then Insurance co will reclaim the NCB given to you but on pro rata basis. Just enquire with them the calculation logic for arriving at that amount. Once you return back the amount, they should provide you the NCB certificate no questions asked.

Alternatively, you could have asked the buyer to bear the cost during the Insurance transfer but this should have been a part of the deal.