Are you thinking of selling your car and buy a new one?
And among the discounts and advantages of the offer, the dealer gives you car insurance for the first year. Of course, how you will miss the opportunity if also is safe all risks.
The offer no longer includes insurance, but you have found another one that is cheaper than the one offered by your insurer for the new car.
Immediately you begin to ask yourself, What do I do with the insurance on the car that I remove?
Can I cancel it early and get my money back?
Can I pass the policy on to the new buyer and have him pay for it?
Why am I going to have to pay if I no longer have the car?
In this article, I will answer your questions in case you are going to sell the car before the end of the current insurance.
How does the sale of the car affect the insurance contract?
Car insurance is a contract with a previously agreed duration and whose conditions must be met by the insurer and the insured. In the event that any of the parties wants to cancel it early, there will be a penalty.
As in insurance, the premium is paid in advance, the penalty will be economic for those who cancel the insurance early. If your policy has the payment of the premium divided, even if you sell the car, you are obliged to pay the full annuity.
When early cancellation is requested by the policyholder, the unconsumed premiums remain in favor of the insurer. If this is the one who cancels it, they will have to return the remaining premium to the policyholder.
As you can see, until now the disappearance of the risk from the sale of the car has not appeared, but do not be in a hurry that I will tell you about it.
But first, we are going to analyze what are the alternatives that exist after selling the car.
1. I sell the car with insurance to the buyer
If the car buyer agrees to transfer the insurance to him at the same time that you sell him the car, you should immediately notify your company. This will analyze if the conditions of the new policyholder and driver (age, experience, driving history) conform to its risk selection rules and will make its proposal.
If the risk profile is equal to or lower than that declared in the insurance, the transfer can be done without any problem. If the risk were greater than the original, the insurer could reject the application.
When this happens, solutions can go through:
- The payment of an additional premium for the new policyholder
- Reserve the unconsumed premium for you to use it later in other insurance. This possibility is exceptional and has an expiration date, depending on the company. Some carry it only until maturity, others extend it to 18 months.
Like any other request that can modify a contract, in the insurance one, it must also be made in writing.
It is essential that you set the date on which the changes should take effect. Remember that if you do not notify the insurer of the sale and from when you cease to be the owner of the car, in the event of a claim, the expenses will be charged to your policy and you will not be exonerated from the risks incurred by the new owner.
2. I want to keep the insurance for the remaining time after I sell the car
You have decided to sell the car but you want to take advantage of what remains for you because you are going to buy another. This is a situation with few complications, although it is not always without its setbacks.
The usual thing is to substitute one vehicle for another. In this case, if there is no delay between the withdrawal of one and the delivery of the other, the company will apply the price that corresponds to the chosen type of insurance, discounting the unused premiums.
The setback can arise if the delivery of the new vehicle is delayed and the old one has already been sold. In that case, you must inform the insurer so that they reserve the premium for you until the new car is delivered.
Before I was talking about this measure and its exceptional nature, so it is convenient for you to have it previously agreed.
3. I have sold the vehicle and do not want to continue with the insurance
It is possible that you know, from what I have told you, how likely you are to lose the unused premium.
Whether you sell the vehicle to a private individual, or if you sell it to a sale or take it to scrap, you are obliged to notify your insurance. In the first two cases, you should inform the buyer, in writing, of the existence of the insurance and its possible transfer.
Once the transmission is verified, you have 15 days to inform the insurer, who may terminate the contract in another fifteen days. If it does, it is obliged to return the unconsumed premium to you.
Ah! And of course, throughout this process, it helps not to have had claims, because if there were …
If you plan to sell the car in the middle of the insurance period, get used to the idea that one of these exceptions must be met in order to return the premium for the time not consumed.
One happens because the insurer accepts the risk derived from the transmission of the vehicle. In that case, it is the buyer who can reimburse you for the remaining insurance time until the renewal.
The other exception is that the company itself decides to terminate the contract.
In all other cases, the best thing that can happen is that you reserve the premium to use it later.
These suggestions will help you and avoid setbacks:
Inform the buyer in writing of the existence of the insurance and then the insurer. Complying with this requirement established in the law can have a positive result for you.
All communications make them in writing in such a way that you can prove it at any time.
And to finish, tell me, did you notify the insurer about the sale of the car? What did you do with the unused premium?
Leave your answer in the comments.