When you replace your old car with a new, you can either buy a fresh car insurance Policy
or substitute your new vehicle for the old vehicle under the existing policy for the balance Term
of the existing policy. You would need to buy a new car insurance policy
if you either intend to retain the old car along with the new car or if you transfer the existing policy to the new owner of your old car.
What about the No Claim Bonus
on my existing policy
The no-claim bonus is not provided on the vehicle but is provided to the driver of the vehicle. While policy on a vehicle can be transferred among people but the no-claim bonus is exclusive to the policy owner. Hence, if you are entitled to a no-claim bonus for the old car insurance policy the same can be transferred to the new car insurance policy you would buy for your new vehicle.There are two scenarios when it comes to retaining the no-claim bonus.
1) If you intend to transfer the existing policy on your old car to the new owner, then while execut ing the policy transfer do make it a point to get a no-claim certificate from the insurance company. The No-claim certificate can be used to get a discount on the policy insurance Premium
on your new car.
2) You can retain the existing policy on you old car and not transfer it to the new owner. Once you have purchased the new car you can substitute the old car with the new car and either pay or get a refund for the difference in premium. The premium differential would largely depend on the Insurance Declared Value (IDV) of the new car which would depend on the value of the car that you purchased.
Validity of No-claim certificate
If you transfer your existing policy and get a no-claim certificate it is important that you use the certificate for claiming a discount on the insurance policy on your new car within 3 years of getting the certificate. Besides, the no-claim certificate can be used only if the new vehicle that you purchase belongs to the same category as old one. You cannot transfer a no-claim bonus earned on a policy on a car to a policy you buy for owning a commercial vehicle like bus.