Cover note | Triple dilemma when transferring name for vehicle

 It is safer to date the transfer papers, fill in the buyer’s details and inform the RTA through registered post acknowledgement due giving details about the sale, including the date and identity of the buyer.
| Photo Credit: kraftmen

In the previous instalment of Cover Note, we saw how selling a vehicle without duly filling the date and buyer’s information in the transfer forms gives room for the buyer to delay transfer of the title to his name and opens the seller up to a whole world of liability.

First off, on selling the vehicle, third-party liability insurance effectively ceases after an interim cover period. After that, should the vehicle be in an accident that damages somebody’s property, injures or kills somebody, guess who will be held responsible? The person whose name is on the RC.

In the worse possibility, the vehicle could be used for illegal purposes.

As advised earlier, it is safer to date the transfer papers, fill in the buyer’s details and inform the RTA through registered post acknowledgement due giving details about the sale, including the date and identity of the buyer. Please do this however persuasive your buyer is, would be my advice.

However, in this claim case, the salvage buyer pointed out that doing this would handicap him as he was buying the vehicle to repair and resell it as that was his business. Extensive repairs would need about 90 days, he said. The insured was highly hesitant, for his own safety, to sign blank forms.

The issues have to be sorted out by the vehicle insurer, perhaps, via the General Insurance Council, and light thrown on RTA and GST matters.

One other option to avoid both the GST and RTA issues was to get the RC cancelled, in effect making the vehicle non-existent. Since it was not a sale and no transfer of title was involved, GST was irrelevant, was the logic. Transfer issues and liability, if the transfer is deferred, also don’t arise.

In another claim of the same insured, his home and contents were covered (by an insurer different from his vehicle insurer) under a fire policy, which includes flood risk. A suitable claim offer for repair of the home and repair/replacement of contents was made and accepted.

When it came to replacement of some contents like appliances, the insurer agreed to foot GST separately. Informally, the company suggested that replacements could be billed to the firm and not the insured, enabling them to avail GST input credit.

The insured shot back that the input credit was his to take and, when he renewed his home insurance, how would the firm insure appliances and furniture not in his name (but in the name of the insurance company)! By now, the insured and the insurers were convinced the former should consult for insurers in addition to his usual industrial clients! The answer to the issues, it seems, belongs right there along with Vikram and vetaal stories!

(The writer is a business journalist specialising in insurance & corporate history)