Motor Insurance

Why Is It Important To Have The Same Name On Your Vehicle RC And Policy Copy

by SMCIB on Monday, October 03 2022

Raj has been wanting to buy a car for quite some time. He recently took driving lessons and decided to purchase a second-hand car for the time being so that he can practice and polish his driving skills. He found a good deal on a second-hand car with insurance and decided to buy it. Unfortunately, Raj was involved in an accident a few months later, and his car was damaged.

He, however, was not concerned much as his car was insured.

When he filed a claim with the insurer, he was surprised to learn that his claim was denied due to a mismatch in the documents. The name printed on the RC or Registration Certificate (which defines the owner of the car) and the insurance policy (which defines the owner of the policy) were not the same.

Why did this happen?

Well, Raj bought a second-hand car and forgot to transfer either the RC or the insurance policy to his name. Hence, the insurer rejected his claim citing a mismatch in the documents.

Other situations where car ownership mismatch can cause troubles during claims

  • When a car is transferred from the employer organization to the employee, based on some scheme. In such instances, it is important that the employee immediately transfers the car in their own name, and then buys the Car Insurance Policy.

  • When someone buys a car in their spouse's name purely for taxation purposes. They then forget about it while purchasing insurance and buy the policy in their own name.

This can happen to you too if you are not careful when purchasing a second-hand car and do not get documents related to the car and insurance transferred in your name. In this article, let’s look at why it's vital to have the same name on the policy and RC copy, as well as the consequences of not having the documents in the same name.

Why Is It Important To Have The Same Name On The RC And Policy Copy?

To make a claim under an insurance policy in India, your RC copy and insurance copy must be in the same name.

So, if you purchase a second-hand car and miss transferring the RC or the insurance policy copy in your name then the insurance company may reject your claim in case you file one.

  1. If The RC Is In The Name Of The Previous Owner But The Insurance Is In Your Name

    Before we get into this, you need to understand one of the most fundamental principles of insurance known as ‘insurable interest’. As per this principle, the person insuring any person or asset should have ownership, or an established financial responsibility or liability in the event of a loss involving that person or property.

    Now, if the name on the RC is of the previous owner and the insurance policy is in your name, the insurer will reject the claim stating that you have no insurable interest in insuring the car in your name. Because the RC copy is in the previous owner's name, he is still the registered owner of the car. So, you cannot obtain an insurance policy in your name. Therefore, both the RC and policy copies must have your name on them.

    For instance, Riya bought a second-hand car from Manoj, her childhood friend. She bought a Car Insurance Plan in her name but forgot to move the RC copy to her name. A few months later, she was involved in an accident, and her car sustained significant damage. When she applied for a claim under the policy, the insurer rejected it because the RC copy was not in her name. So, she had to pay for the expenses from her pocket.

  2. If Both The RC And The Policy Copy Are Not In Your Name

    In this case, all claim-related paperwork, whether cashless or reimbursement, will be done between the insurer and the owner as specified in the RC. And, in case you file a reimbursement claim, you will not be eligible to receive the claim amount. All the paperwork regarding claims and repair will have to be done by the previous owner of the car, which can become a big inconvenience for you. The insurer will pay the claim to the previous owner of the vehicle - and, you may then have to recover this money from the owner.

    For instance, Mayank recently purchased a second-hand car but forgot to transfer the RC and the policy copies to his name. His car is involved in an accident just a few weeks after purchasing it. He applies for a reimbursement claim under the policy. Since the documents are not in his name, the insurer will not pay the claim amount to him. They will pay the claim money to the previous owner of the car.

Hence, to avoid such hassles during a claim, ensure that you get both the RC and the policy copy transferred to your name as soon as you purchase a second-hand car.

Important Points To Note

Here are a few important things you must keep in mind -

  1. Finish All Formalities

    When buying or selling a car, you should make sure that you complete all formalities such as document transfer, etc. This will ensure that there are no complications in case a claim arises in the future.

  2. If You’re Buying An Insurance Policy…

    When you are purchasing a Car Insurance Policy, you should always ensure that you refer to the latest RC copy before entering the name of the ‘insured’ in the proposal form.

  3. If You Already Have An Insurance Policy…

    If you have an existing Car Insurance Policy, make sure the car owner’s name on the policy matches the name on the Registration Certificate. In case of any inconsistency, or if there’s any error in spelling, etc., ensure you inform the insurer and get an endorsement done to reflect the changes.

So, you can see how your claim may be impacted if you buy a second-hand car but do not transfer the RC or policy copy to your name. When buying a second-hand car, make sure you keep the points we've mentioned above in mind to avoid any claim-related difficulties in the future.

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