Should I Cancel the Insurance Before or After Transferring Ownership When Selling a Car?
2 Answers
Whether to transfer ownership or cancel insurance first for a used car depends on the actual situation. Auto insurance is divided into compulsory traffic insurance and commercial auto insurance. For compulsory traffic insurance, you can transfer the car ownership first and then the insurance; for commercial auto insurance, you can cancel the insurance first and then transfer the used car, or transfer the used car first and then cancel the insurance. The following are some insurance considerations: Avoid Duplicate Insurance: When purchasing insurance, avoid duplicate coverage. Even if the owner duplicates coverage for one type of insurance, they will not receive excess compensation for claims. Avoid Over-Insurance or Under-Insurance: Over-insurance or under-insurance does not provide effective coverage. According to Article 39 of the Insurance Law: The insured amount shall not exceed the insured value. If it exceeds the insured value, the excess portion is invalid. If the insured amount is lower than the insured value, unless otherwise agreed in the contract, the insurer shall bear the liability for compensation in proportion to the ratio of the insured amount to the insured value. Carefully Review Insurance Documents: Check whether the third copy is printed on white carbonless paper with a light brown anti-counterfeiting background, whether the upper left corner is printed with the words "Supervised by the China Insurance Regulatory Commission," and whether the upper right corner is printed with the words "Limited to sale in ×× province, city, or autonomous region."
I have quite some experience in handling insurance cancellation when selling a car. Generally, I recommend completing the transfer procedures first before calling to cancel the insurance. Once the transfer is done, it proves the car no longer belongs to you, making this the safest time to cancel the insurance. During the transfer process, if the new owner gets into an accident while driving, the insurance is still under your name, and you might still be held liable. Conversely, if you cancel the insurance early and an accident occurs before the transfer is finalized, there's no coverage at all. On the day of the transfer, bring your ID card, vehicle license, and other required documents to the DMV. After completing the transfer and obtaining the transfer certificate, immediately contact the insurance company to provide the proof. They will cancel the insurance from the transfer date and process any possible refunds. This approach avoids wasting extra premiums and ensures the entire process is risk-free. I believe this sequence shouldn't be messed up, otherwise minor issues could turn into big troubles, especially during peak seasons when transfer queues are long—extra caution is needed.
