Buying/Selling your Car? Here's How Insurance Impacts your Deal!
In case you have been thinking about buying a used car, you are not the only one. A lot of people are shifting their focus to used cars for saving lost funds because of heavy depreciation in the cost of new rides in their initial years.
However, both sellers, as well as buyers, need to be aware of the car insurance policies related to the transfer of the vehicle, considering the No Claim Discounts, etc. Missing even some of the steps may make it pretty expensive for any of the parties.
From the point of view of the seller, the insurance plan should be transferred in the name of the buyer after the car has been sold.
The car seller should claim the no-claims bonus of NCB certificate (if any), from the insurance provider once the policy is getting transferred in the buyer’s name. A No Claim Bonus is a discount on the insurance premium to the policyholders who did not make any claim or claims during the preceding years.
The rate of NCB is based on the number of years that remain claim-free. Moreover, this bonus is non-transferrable to the car buyer from the seller. The NCB certificate you receive remains valid for a particular duration.
Such a discount will be applicable to new car insurance in UAE bought for a car within this duration. Keep in mind that the No Claims discount is also applicable if you are switching to a new insurance provider.
In the case of buyers, it is essential to apply for the ownership transfer of the insurance plan within the initial few days of purchasing the vehicle, lest they wish to risk the chance of their claim getting rejected.
How will the Transfer take Place?
The seller needs to intimate the insurance provider in writing for making such a transfer. Some nominal charges may be levied for transferring along with the pro-rata recovery of the No Claims Bonus from the transfer date to the expiry of the policy.
However, usually, some of the confusion about which car insurance entails & useless assumptions may cause various problems for the policyholders during the claim settlement process.
Here is a complete checklist that you need to go through before opting for car insurance in UAE.
What does Motor Insurance consist of?
There are two types of car insurance- third-party liability and comprehensive policy. The former includes only the damages caused to the third party in case of an accident, while the latter includes third-party along with other damages caused.
Any damage to your car is not covered in the case of third party insurance while a comprehensive plan will include the cost of replacing your vehicle or repairing the damages caused to it.
How to Calculate the Sum Assured on the Policy?
In an auto insurance plan, the sum assured refers to the value of the vehicle that is calculated on the basis of IDV (Insured’s Declared Value). The IDV is dependent on the current value of your vehicle and depreciation.
How to Choose a Motor Insurance Provider?
An ideal insurance company must have a huge network of service stations or garages for cashless services. Another important consideration is a quick and easy claim settlement process. You must go to an insurance company that has all of these to offer and of course a suitable insurance plan.
What Factors Affect the Insurance Premium?
The insurance premium charged on car insurance in UAE may vary from one insurer to another. The factors determining this premium are the offered discounts, the difference in the methods of calculating the IDV, coverage for personal accident, and more.
The details about your vehicle mentioned in your auto insurance plan document should coincide with the details in your car registration certificate including model, clearance certificate, fuel type (CNG, petrol, diesel), seating capacity, and more.
The insurance premium for personal accident cover is almost similar at different insurance companies and is dependent on your selection. This can be availed as an additional benefit or an optional cover and might not come included in the policy.
The insurance providers may reduce the IDV that also leads to a decrease in the premium amount. This may seem to be attractive initially; however, you need to keep in mind that a lower IDV means a lower sum assured too during claim settlement because it reduces the estimated value of your vehicle. The value of your vehicle is the basis for calculating your sum assured. If your IDV is on the higher end, it will help at the time of claim settlement as well as while selling your vehicle.
What to Keep in Mind while Insurance Policy Renewal?
Here are a few things you need to consider at the time of policy renewal.
- The premium amount is lower than the previous year in case no claims are made
- The No Claim Bonus for the current year should be more than the previous year, if applicable
- The IDV is reduced by a certain amount as opposed to the previous year due to depreciation of the vehicle
Buying a used car can be beneficial for you in many ways, but you need to make sure that the transfer of the ownership, as well as insurance, is done properly.