Who receives vehicle insurance upon transfer of ownership?

A vehicle that is being transferred seems to belong to no one completely. Does it belong to the previous owner, or to the buyer who has already paid for the car? And what about the car insurance? Read on to find out.

A vehicle that is being transferred is essentially a car that has been placed in “limbo.” The car does not belong to the previous owner, since he or she has already received payment for the car, but it also does not “belong” to the new owner, because it is not yet in his or her name. This situation can complicate the use of insurance.

Imagine that you have a vehicle with insurance. The protection has always been a great help, since it covered potential losses due to collisions, lightning strikes, and others. Now, however, you want to buy a new car, so you are going to sell your old one.

Soon, a buyer becomes interested. He makes a cash purchase of the car and starts using it right away. You still need to transfer ownership of the vehicle, but since you both work, you arrange to go to the DMV together on Saturday.

The new owner, happy with his purchase, goes out for a drive. On the way, he crashes the vehicle into a pole and needs to make a claim on the insurance. After all, the car still has active protection, and the user will not have to bear the loss alone. But then the question arises: who receives the insurance?

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Who receives insurance for a vehicle being transferred?

Car insurance is usually taken out in the name of the vehicle owner. Since you and the buyer of the car have not yet transferred ownership, the insurance remains in your name. So, for the insurer, the compensation amounts should be deposited into your account.

This deposit, however, would not be fair. The car is no longer yours, and the other driver needs the money to repair the vehicle. In this type of situation, insurance companies usually offer an alternative route. It consists of the following: the buyer and seller fill out the CRV (Vehicle Registration Certificate) and have it notarized.

Then, using this document, both individuals must register a public power of attorney at a notary's office. This power of attorney will give the insurance company the power to finalize the process of transferring the car to the DMV (State Department of Traffic). Once this is completed, the compensation will be released to the new owner of the car.

When the compensation is full, there is one more step in this process. Full compensation is paid whenever the car is stolen or robbed and not recovered. It is also paid when the repair of the vehicle would cost more than 75% of the vehicle's value. Only then is the compensation released. The rules are determined by Susep (Superintendence of Private Insurance).

To pay full compensation, the insurance company transfers the damaged car into its own name. Using the same power of attorney, the buyer and seller can then authorize this transfer of ownership to the insurance company.

In any case, a power of attorney costs up to R$250. To avoid this expense, always speed up the transfer process. Don't leave it for later! Updating documents quickly can avoid headaches.

This entire process may vary depending on the insurance company. Therefore, it is worth checking your insurance contract and talking to your broker.

How to transfer ownership?

Transferring ownership of a vehicle is relatively simple. First, the seller and buyer must sign the vehicle registration document. Then, the buyer will need to notarize the document. Documents such as the buyer's ID or driver's license, CPF and proof of residence will be requested.

The next step is to go to the DMV, as it is necessary to schedule an inspection with the agency. Once approved, the vehicle will have a new CRLV (Vehicle Registration and Licensing Certificate) and a new CRV issued. It is important to complete this process within 30 days of purchasing the vehicle. Otherwise, the buyer will be subject to a fine.

Can I transfer vehicle insurance?

If the new owner of the car wishes, he or she can continue to have the vehicle insurance. In this case, the former owner of the car must inform the insurance company of this wish.

Complete information about the new owner must be provided, including ID, proof of residence, etc. The new owner of the vehicle must sign the insurance policy and will be responsible for future monthly payments, deductibles, and other associated fees.

In any case, it is worth checking whether a new insurance policy would be more interesting. The buyer may want coverage that the current insurance policy does not have, for example.

Now you know how vehicle insurance works when transferring ownership. Remember to talk to the insurance company after any problems, and make sure you understand the steps the company is taking.