Purchasing used cars has become a trend and a favorite personal choice. Besides saving money, another advantage of buying a pre-owned car saves time because of the more straightforward process.
In buying and selling used vehicles, car insurance policies play a significant role. Both buyer and seller need to understand different factors to make sure that not just car ownership but car insurance as well, is appropriately transferred.
Transferring the car insurance policy
In transferring car insurance plans, it is the seller’s responsibility to notify the insurance provider. Create a written request and provide this to your insurer as soon as possible. Additionally, prepare to pay a nominal transfer fee and prorated recovery fee for the transfer of NCB.
Components of auto insurance
Motor insurance coverage has two primary elements. They are:
- Third-Party Coverage – Provides coverage for damages or injuries caused by the policyholder’s car to a third party. The coverage amount is computed based on the vehicle’s engine capacity.
- Own Damage Coverage – Provides coverage for damages to the policyholder’s car. The coverage amount is based on the Insured Declared Value or IDV, which is identified by the time the policy is purchased.
The risk level
When purchasing used cars, be aware that the vehicle may no longer be the same package as it came out of the showroom. Modifications have most probably been made to either improve its appearance or performance.
Anything that has been altered or changed, e.g., wheels, engine, brakes, suspension, etc., will inevitably cause a difference in the vehicle’s performance.
Saving money on used car insurance
Purchasing car insurance for new or used vehicles can both be pricey. But there are ways on how you can make sure that you don’t pay premiums that are higher than the value of your car.
- Shop around and check various policies for second-hand cars.
- Choose only what’s necessary. A comprehensive policy may sound magnificent, but it may be too much if you have an older model car.
- Opt for higher deductible amounts.
- Observe safety on the road.