Do you have to transfer the insurance to the new owner when selling a car?

Every time you buy or sell a car, you may wonder: Do you need to transfer the insurance policy when selling a car? And there are indeed many nuances to this issue. So, in this article, we’ll explain in detail what to do about insurance when selling a car. 

Does the insurance remain in effect after the car is sold?

Let’s start with the most important point: Does the insurance coverage carry over when the car is sold, or does the new owner have to purchase a new insurance policy? Based on the law on compulsory motor vehicle liability insurance, we can conclude that the insurance policy is issued based on the vehicle’s VIN, not the policyholder. So, does the car owner need to be listed on the insurance policy? No. Any driver can legally operate the vehicle. But there’s always a “but”.

The nuance is that the validity of the insurance is affected by the vehicle owner’s registered residence area. Simply put, if the previous owner was registered in a rural area and the new owner is registered in a city, the insurance policy is canceled upon the sale of the car, and a new one must be issued. In the opposite case, or if the registered residence areas are the same, the insurance remains valid.

Do I need to transfer the auto liability insurance to the new owner?

Do you need insurance when selling a car? Absolutely—as long as you follow the guidelines outlined in the previous section, you can transfer the policy to the new owner. In that case, it will remain in effect until the end of the term specified in the policy.

However, the new owner is required to notify the insurance company in writing of the change in car ownership within 15 calendar days. And, of course, you’ll need to provide your personal information.

How do I cancel an insurance policy and get a partial refund?

If you’re still wondering how to get a refund on your auto insurance after selling your car to recoup some of the cost, you’ll need to contact the company where you purchased the policy. The company will calculate the remaining value and will be able to refund a portion of the cost.

However, there is a small catch when it comes to getting a refund on auto insurance when selling a car. Before considering how to get a refund on your auto liability insurance when selling a car, you need to check the policy’s expiration date. The closer the policy is to expiring, the smaller the refund amount will be. Also, if there is less than one month left before the policy expires, the insurance company may refuse to refund the car insurance premium. Furthermore, you must request this refund before the car is sold, as the seller will no longer be able to do so afterward.

If you’re buying a new car and want to transfer the remaining balance to a new policy, you can do that as well. And, most likely, this will be more cost-effective than getting a refund.

How can I check if the car I purchased is already insured?

When buying a car, you can also check the status of the insurance if the previous owner did not provide the insurance policy. But be careful: to check the insurance, you must enter the vehicle identification number listed on the old insurance policy or the policy number. Since new license plates are usually issued during the transfer of ownership, you won’t be able to verify the insurance status. This is a very important point, as a traffic accident could lead to major problems.

What happens if you purchase a new insurance policy without canceling the old one?

If you did not check the expiration date of your previous OSAGO policy and purchased a new one, you should be aware of the following insurance rules:

1. The most recently purchased insurance policy will be valid, and all previous policies will be canceled.

2. In the event of a traffic accident caused by you, you can file a claim with either your own insurance company or the at-fault party’s insurance company. In any case, only the most recently issued insurance policy will be valid.

3. If, for any reason, your insurance policy is valid with one insurance company but you file a claim with another, the insurance company that pays out the claim may seek recourse against you. What recourse is—that’s a topic for a separate article.

Conclusions

Does the insurance coverage remain in effect when you sell your car? Yes, it does, but when selling a car and transferring the insurance, you need to consider many factors that affect the validity of the mandatory auto liability insurance policy. Please read this article carefully and take all the details into account.

If you are a client of our company, our managers are always happy to advise you on any questions you may have.