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Is It Possible to Sell Your Car Without A Valid Car Insurance Policy?

By Vikas Chandra Das
21 July 2022, 11:46 AM

Selling a car can be an emotional thing for some and just a business deal for some but, either way, it should be done the right way. It involves a lot of documentation and you have to be aware of what is required before striking the deal.

One thing that many car sellers are confused about is whether they can sell a car without a valid car insurance policy or not. So, let us help you find the answer through this article.

Can You Sell Your Car Without Insurance?

No! That’s the simple answer. It is illegal to sell your car without a valid car insurance policy and moreover, doing so can lead to huge repercussions later on. Many users tend to skip renewing the insurance once they decide to sell their car but this can backfire in the end.

Here, we have explained why you should definitely have valid insurance for the car while making the deal.

  • It is against the law – To start with, it is completely against the law. As per the Motor Vehicles Act, 1988, you have to submit certain documents like the Registration Certificate and insurance papers in the RTO before transferring the car to the new owner. Without ownership transfer, any damages or losses caused due to the car will be your responsibility.
  • It is dangerous – Since there is no insurance, there will be no transfer of ownership. Imagine a situation where you get called to the police station for your car being confiscated because of some accident or being involved in some illegal work, it is you who will be held responsible. Even if you do not have a link to these incidents, the court will hold you accountable.
  • You will not be able to sell the car to an authorised dealer – If you are to make the sale to a car dealership, then you definitely will not be able to do that without valid insurance for the car.

When do You Require a Transfer of Ownership With or Without Selling a Car?

There are three scenarios where you need a transfer of ownership.

  • A normal sale – This is the sale where a car owner feels like selling a car for personal reasons. It can be for monetary purposes or just because he/she intends to buy a new car and wants to sell the odd one. Either way, the transfer of ownership has to be done.
  • If the owner dies – If the owner dies then the ownership of the car has to be transferred to the new owner, even if it is the owner’s kin.
  • Sold in a public auction – If you are selling a car in a public auction, the ownership must be transferred to the new owner. This is mostly done for vintage cars where a lot of people are interested in a particular car.

In all these scenarios, you need a valid insurance policy to get the transfer of ownership certificate.

Why Should You Have a Legal Insurance Policy?

  • To not break the law – The law states that you must always have a valid insurance policy while using the car. If you do not have one, you will be booked by the police and fined a hefty amount.
  • To cover the interim period before the sale – If you are about to complete the insurance term and you still have a few weeks or months before the sale, it is important to renew your term for sure. If you continue to use the car during this term and end up getting involved in a car accident, you will have to pay out of your own pocket.
  • To get insurance cover – Imagine a scenario that your car is damaged just a few days before your sale. You not only lose the potential buyer but you also end up paying for the damages because of not having a valid insurance cover.
  • To save money on possible damages during a test drive – Let’s say, your potential buyer wants to test drive the car before making the deal, and you oblige. However, during this drive, the buyer meets with an accident that causes a few major dents on the car. It is you who will have to pay for the damages, even if you had nothing to do with it.
  • Monetary penalties – Imagine a situation where you are driving your car on an official second-hand showroom road, where you skip a traffic signal. The traffic police see this and ask for car documents like insurance, PUC certificate, and RC. Well, you will have to pay the penalty for not having a valid insurance policy at this time.

In conclusion

Selling a car without a valid insurance policy is something that you should not even think of. If your insurance’s term is finished and you are about to sell your car, you can renew the policy with just the basic benefits and no add-on covers.

This way, you do not have to spend a lot of money on insurance for a car that you will not be the owner of in a few months’ time. To get the best deal, compare policies online before buying. 

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