Does it matter if the car is transferred but the insurance is not?
4 Answers
When purchasing a used car, it is best to promptly transfer the compulsory traffic insurance. After completing the vehicle transfer procedures at the vehicle management department, it is advisable to promptly transfer the insurance at the insurance company. The relevant information is as follows: Automobile Insurance: Automobile insurance mainly consists of compulsory traffic insurance and commercial insurance. Compulsory traffic insurance is mandatory, but its coverage limit is not high. Commercial Insurance: Commercial insurance is optional and mainly includes the following types: Vehicle Damage Insurance - covers repair costs for your own vehicle due to collisions, with compensation provided by the insurance company. Third-Party Liability Insurance: Covers compensation for death, injury, or property damage caused by accidents involving both parties, paid by the insurance company; No-Deductible Special Clause Insurance: covers the deductible portion that the insured should bear according to the policy terms, assumed by the insurance company.
When a car is transferred but the insurance isn't updated accordingly, it can lead to significant issues. A friend of mine bought a used car last year and, for the sake of convenience, only completed the vehicle transfer without updating the insurance information with the insurer. Within two months, he accidentally scraped another car while reversing. When he called the insurance company to file a claim, they directly pointed out that the policy was still under the previous owner's name and refused to recognize his status as the new owner, insisting that the original owner handle the claim. It took several weeks to sort it out. The more frustrating part is that if he had gone to the insurance company to update the information right away, it would have only required bringing the new vehicle registration, ID card, and transfer proof, filling out an endorsement form at the counter in half an hour, with no additional premium cost. Now, whenever friends around me buy used cars, I urge them to rush to the insurance company to update the insurance on the same day as the transfer, avoiding future claim delays and potential impacts on compulsory insurance renewal discounts.
The most direct trouble with not transferring insurance is the difficulty in claiming compensation. I've personally handled such cases where the vehicle was transferred but the insurance policy remained under the original owner's name, meaning the insurance beneficiary and the vehicle owner were not the same person. In case of an accident, when you apply for a claim, the insurance company will first verify the identity of the insured. If the names don't match, at best, they'll ask you to get the original owner to sign a power of attorney, and at worst, they'll outright reject your claim. What's even more problematic is the vehicle and vessel tax issue. If the compulsory insurance policy isn't transferred, when renewing the insurance the next year, the tax bureau's records will still show the tax under the original owner's name, and the new owner might have to pay it again. Also, in some places, the annual vehicle inspection requires a copy of the compulsory insurance policy. If the name on the policy doesn't match the vehicle owner, the DMV might give you a hard time.
Not changing the insurance policy name after a vehicle transfer is like wearing someone else's coat on the street. The biggest risk is claim rejection: After an accident, the insurance company sees the policyholder is still the original owner and may deem you ineligible for compensation. Worse, if the original owner discovers the insurance is still under their name and cancels the policy to reclaim the remaining premium, your car could be left without even compulsory insurance in case of an accident. I once saw this scenario at a repair shop—a car owner was unaware that their original owner had canceled the collision insurance, resulting in over 10,000 yuan out of pocket after a rear-end collision. It’s advisable to visit the insurance company immediately after transferring the vehicle to update the policy. Just bring the new vehicle registration and personal ID—the process is free and takes just ten minutes.
