(1) Where a person in whose favour the certificate of insurance has been issued in accordance with the provisions of this Chapter transfers to another person the ownership of the motor vehicle in respect of which such insurance was taken, together with the policy of insurance relating thereto, the certificate of insurance and the policy described in the certificate shall be deemed to have been transferred in favour of the person to whom the motor vehicle is transferred, with effect from the date of its transfer.
Explanation.—For the removal of doubts, it is hereby declared that such deemed transfer shall include transfer of rights and liabilities of the said certificate of insurance and policy of insurance.
(2) The transferee shall apply within fourteen days from the date of transfer in the prescribed form to the insurer for making necessary changes in regard to the fact of transfer in the certificate of insurance and the policy described in the certificate in his favour, and the insurer shall make the necessary changes in the certificate and the policy of insurance in regard to the transfer of insurance.
Simplified Explanation
Section 157 of the Motor Vehicles Act in India deals with the transfer of a certificate of insurance when a vehicle is sold or otherwise transferred to a new owner. This section outlines how the insurance policy tied to the vehicle should automatically be transferred to the new owner, ensuring continuous insurance coverage without the need for the new owner to obtain a fresh insurance policy immediately.
Overview of Section 157
When ownership of a motor vehicle is transferred, the corresponding insurance policy also gets transferred to the new owner. This section ensures that the rights and liabilities under the existing insurance policy remain intact after the transfer, thus avoiding gaps in insurance coverage during the transition.
Key Elements of Section 157
- Automatic Transfer of Insurance:
- Upon the transfer of a vehicle, the certificate of insurance and the insurance policy automatically get transferred to the new owner. The new owner inherits the insurance coverage, which continues to provide protection under the same terms and conditions as it did for the previous owner.
- Time Frame for Intimating the Insurer:
- The new owner is required to notify the insurer about the transfer of ownership within 14 days of the vehicle’s transfer. This notification ensures that the insurance company is aware of the change in ownership and can update their records accordingly.
- Coverage During the Transfer:
- Even if the insurer has not been notified immediately, the insurance policy remains effective for the new owner for the first 14 days after the vehicle’s transfer. This provision ensures that the vehicle is not without insurance coverage during the initial transfer period.
- Liabilities of the Insurer:
- The insurer remains liable for any third-party claims arising from the use of the vehicle during the transfer process, even if the ownership has changed, as long as the transfer has been done within the framework of the law.
- Protection of Third-Party Rights:
- Third-party rights are protected throughout the transfer process. If an accident occurs during the transition, the insurance policy will still cover third-party liabilities, ensuring that victims are compensated.
Practical Implications
- Continuous Coverage: The automatic transfer provision ensures that the vehicle remains insured during ownership transfer, protecting both the new owner and third parties from potential uninsured liabilities.
- Timely Notification: The new owner must notify the insurer within 14 days, allowing the insurance company to update their records and ensure the policy is correctly assigned to the new owner.
- Smooth Claims Process: Even during the transition, the insurance policy remains active, allowing for a smooth claims process in case of accidents or third-party claims.
- Responsibility of the New Owner: It becomes the responsibility of the new owner to ensure they notify the insurance company of the transfer and adhere to the policy’s conditions after the transfer.
Conclusion
Section 157 of the Motor Vehicles Act ensures that when a vehicle is transferred to a new owner, the insurance coverage tied to the vehicle is also transferred seamlessly. This provision prevents any gaps in insurance coverage and ensures that third-party rights are protected throughout the transfer process. By making the insurance policy transferable, the Act simplifies the process for both vehicle buyers and sellers, promoting continuity and clarity in the insurance framework for motor vehicles.
