Does Insurance Need to Be Transferred When Transferring Vehicle Ownership?
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When transferring vehicle ownership, the insurance also needs to undergo transfer procedures. According to relevant provisions of the Insurance Law, during the validity period of the insurance, if the vehicle is sold, transferred, gifted to others, or its use is changed, the insured must notify the insurance company in writing and apply for policy endorsement. Otherwise, the insurance company has the right to refuse compensation. Therefore, when transferring vehicle ownership, the auto insurance must either be transferred or canceled. Auto insurance is divided into compulsory traffic insurance (CTI) and commercial insurance, and the transfer procedures for these two types of insurance differ. CTI Transfer: According to the "Compulsory Traffic Insurance Regulations," CTI cannot be canceled in principle during the sale of a used vehicle. The only exception is when the vehicle is sold in a different location, in which case the new owner can purchase a new CTI policy in the new registration area. In this scenario, the new owner must bring their ID card, new vehicle license, used vehicle transfer documents, and the newly issued CTI policy to the original owner's insurance company to cancel the old policy. Commercial Insurance Timely Transfer: After transferring ownership of a used vehicle, it is essential not only to focus on the CTI transfer but also to pay attention to the commercial insurance. For locally purchased used vehicles, the transfer requires both the new and original owners to bring the original policy, ID cards, new vehicle license, and transfer certificate to the original insurance company for processing. Documents required from the original owner for the transfer include the vehicle registration certificate, vehicle license, and ID card. The buyer needs to provide an ID card, and if they are from another region, a residence permit or temporary residence certificate is also required. Vehicle transfer first requires a vehicle evaluation. The evaluation fee is generally 1%-2% of the assessed vehicle price, and other costs include license plate and vehicle license fees. The original owner's commercial insurance can be canceled (CTI cannot be canceled), or the insurance can be transferred to the new owner at the insurance company. Precautions for Buying Used Vehicles: Incomplete documentation: Complete documentation for a used vehicle includes the vehicle registration certificate (or original purchase invoice), vehicle license, vehicle purchase tax payment certificate, road maintenance fee records, and CTI. Missing vehicle registration certificates or licenses, or unpaid CTI or road maintenance fees, can cause endless trouble for the buyer. Therefore, if the seller cannot provide complete documentation, the buyer should be particularly cautious. Tampering with the odometer: Most consumers judge a vehicle's condition based on the odometer, and sellers often take advantage of this by tampering with it. The odometer is not just a record of usage intensity but also an indicator for the maintenance and replacement of other vehicle components. If the buyer follows maintenance schedules based on a tampered odometer, it can lead to a series of potential safety hazards. New paint covering "injuries": When purchasing a used vehicle, if the car has been repainted and there are signs of repairs around the front, rear, or A, B, and C pillars, the vehicle may have been involved in a major accident. "Tuning the heart" to raise the price: Many consumers focus too much on the vehicle's "heart" (engine) and neglect the health of the car body. Sellers exploit this by replacing engine components to make the vehicle's "heart" appear younger, thereby inflating the price.
Last time when I sold my car and went through the ownership transfer, I realized that the insurance indeed needs to be transferred as well. The original owner must contact the insurance company to complete the procedures and change the name on the policy to the new buyer. If this isn't done, the new owner would be driving without insurance coverage, which would be disastrous in case of an accident—medical expenses and repair costs would have to be paid out of pocket. In my case, both the buyer and seller went together to the insurance company's branch, filled out the transfer form, and provided ID cards and vehicle information to get it done. Compulsory traffic insurance (CTI) is a mandatory legal requirement, and it becomes invalid if not transferred—getting caught by the police could result in points deduction and fines. Commercial insurance like vehicle damage insurance should also be transferred to avoid wasting the remaining premium. Remember to arrange this before the transfer; don't wait until you're driving to discover a major loophole that affects safety and daily convenience. This step is indispensable for everyday driving.
Insurance transfer is a matter of life and property safety. What I fear most when driving on the road is encountering an unexpected accident without coverage. When transferring vehicle ownership, the original insurance should be promptly transferred to the new owner's name; otherwise, the new owner will effectively be driving without insurance. The DMV requires that the vehicle's insurance must be valid at the time of transfer. If the compulsory traffic insurance is not transferred, it becomes void immediately, and commercial insurance like third-party liability insurance will also become invalid, affecting claims. If the transfer is forgotten, the new owner may have to repurchase full coverage insurance, starting at several thousand dollars, with potential premium increases based on age or driving records. It's advisable for both buyer and seller to discuss insurance arrangements before signing the contract. They should negotiate and coordinate with the insurance company to handle the changes, minimizing risks and preventing small issues from turning into major headaches.
Transferring car ownership can be costly, but insurance transfer is a money-saving trick. When I bought a used car before, I directly inherited the previous owner's insurance, saving the down payment for new compulsory traffic insurance and commercial insurance. The remaining months of the original policy could still be used, which was much cheaper than taking out a new policy. If the insurance isn't transferred, the new owner would have to start from scratch, wasting money, and might even be affected by historical claims records impacting discounts. The transfer process just requires contacting the insurance company to update information, with a small handling fee to get it done—don't let the process drain your wallet.
