Should I transfer ownership or cancel insurance first when selling a car?
3 Answers
Whether to transfer ownership or cancel insurance first when selling a car depends on whether it's compulsory traffic insurance or commercial insurance. Compulsory Traffic Insurance: For compulsory traffic insurance, you can only transfer ownership first, and the insurance cannot be canceled after the transfer. Because compulsory traffic insurance follows the vehicle, not the owner. According to the "Compulsory Traffic Insurance Regulations," the insurance can only be canceled when the insured vehicle is deregistered, officially declared out of service, or confirmed lost by public security authorities. Obviously, a used car transaction does not fall under these categories. Commercial Insurance: For commercial auto insurance, the owner can choose to transfer ownership first and then cancel the insurance, or cancel the insurance first and then transfer ownership. It is recommended to cancel the commercial insurance first, as usually after the vehicle is transferred, the insurance is sold along with the car. If the insurance premium was not included in the sale agreement, the owner can cancel the insurance by providing the transfer documents, and the insurance company will refund a portion of the premium based on the policy value.
I've sold quite a few cars, and from experience, it's best to cancel the insurance before transferring ownership. Why? Because the insurance is tied to your name. If you cancel the insurance after the transfer, the car is already under someone else's name, but the insurance might still be active. If the buyer gets into an accident while driving, the insurance company might hold you accountable, and you won't be able to shake off the responsibility. At the same time, the unrenewed insurance will still be charging fees, wasting your money for nothing. I recommend contacting the insurance company to cancel the policy before signing the car sale agreement—they can calculate the refund for the remaining period, and you might even get some money back. When transferring ownership, make sure to bring all the necessary documents, such as the vehicle registration certificate, ID card, and tax payment proof, and both parties should go to the DMV together—it's simple and hassle-free. Canceling the insurance before the transfer ensures everything is clean, and the buyer can promptly get new insurance for the road, making it safe and legal.
As a car owner, I always cancel the insurance first before considering the transfer when selling my car. Safety is too important—if the car is transferred but the insurance is still under my name, and the new owner gets into an accident and hits someone, I could be dragged into a lawsuit, turning my life upside down. Canceling the insurance isn’t complicated—just a phone call to the insurer, and they’ll handle the refund and paperwork, usually returning a portion of the unused premium. The transfer is the final step, ensuring that once the ownership is transferred to someone else, I won’t have to worry anymore. I remember a friend who forgot to cancel the insurance after transferring the car and ended up paying for an extra six months of coverage—what a waste! So, I recommend planning ahead: contact the insurance company a month before selling the car, bring all the necessary documents during the transfer, and avoid any risks. This sequence protects both parties and is especially helpful for first-time sellers.
