May 18, 2024

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Scrapping your car? Know the process to transfer insurance from your old car

Thinking of scrapping your old car? Here's what you need to know and do -

Scrapping your old car might be difficult, but oftentimes, it is the right thing to do. Old cars tend to hurt the environment more and the cost associated with maintenance of old vehicles could tire your wallet. 

India’s new scrappage policy

The 2021 Union Budget introduced a scrappage policy, which was a very new idea for Indian consumers. The policy, aims at environment conservation, promotes the scrapping of old vehicles in lieu of different discounts and tax benefits. 

What is the process to scrap your car?

If your vehicle is deemed unfit for the road after the end of your current registration period, you can opt to scrap your car. For this, you need an authorisation from your nearest regional transport office. After the authorisation, you can scrap your car with the help of a registered agent and once the scrapping is done, your car’s registration will be cancelled and you will get a certification of the same to help you avail incentives. 

How can you transfer car insurance of your scrapped car? 

Your car insurance policy will become void once your car is scrapped. However, your money is not lost. You can utilise your no claim bonus (NCB) to get up to 50% savings on motor insurance on your new car during car insurance transfer, according to the terms and conditions of your insurance policy. Please visit the official website of IRDAI for further details.

What is NCB?

NCB is a reward system that insurance companies offer. You can claim NCB from your old insurance policy to save between 20% and 50% on insurance for your new car. * All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C apply. 

One important factor here is that NCB is only applicable to own damage premium and not on third party car insurance. So, the benefit can only be availed if you have a comprehensive car insurance policy. Third-party insurances only cover for the damages that your car causes to a third-party during an accident, while comprehensive plans cover both third-party damages, and damages to your own vehicles. 

Who can apply for NCB?

According to the Insurance Regulatory and Development Authority of India (IRDAI), you can avail NCB from your insurance policy provider if you have not made any claims during the current insurance period of your car. You can avail the facility even if you choose a different insurance policy provider for insuring your new car. You can visit the official website of IRDAI for further details.

How to claim NCB?

For NCB claims, it is important that both the old car and the new car are registered in your name. If that is the case, you can inform your car insurance policy provider about the scrappage and request for an NCB certificate. You can use this certificate to save on your new car’s insurance policy.

Scrapping your old car is important to save our environment from further pollution. A proper comprehensive car insurance policy is equally important. It is advisable to make sure you find which policy fits you the best and while doing that, not to miss out on perks like NCB. Also note that insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms and conditions, please read sales brochure/policy wording carefully before concluding a sale.