Its is a known and a mandatory fact for any vehicle to have valid Insurance to be able to be driven on Indian roads. In case of any mishap or claim, Insurance co do check whether there is a valid insurance on the vehicle to pay off the repair charges. In case of no Insurance available on the vehicle in the event of a claim, the Insurance co can refuse any claims towards the repair charges. The same applied to pre owned vehicles too. If the transfer of Insurance is not done within 14 days of ownership transfer, Insurance co will refuse any claim charges from the new owner if the Insurance is still in the name of previous owner. Insurance doesnt not transfer automatically once the vehicle changes ownership. It is the duty of the new owner to ensure that the Insurance transfer happens in his name from the previous owner so that any claim can be honored by the Insurance co. It is always preferable that the transfer of Insurance happens in parallel with the transfer of ownership, same set of documents can be provided to the Insurer as the owner ship transfer. The below link explains the importance of Insurance transfer where the claimant did not have a valid Insurance for the vehicle as it was still in the name of ex-owner. http://www.thehindu.com/todays-pape...licy-is-in-name-of-exowner/article6474495.ece Many a times the vehicle is sold to the dealer in exchange for brand new/used vehicles and due diligence of transferring the document to the dealer is not considered as the dealer himself doesnt want to take the ownership. Instead he waits for the car to be sold so that the Insurance can be transferred to the new owner. Buyers and sellers to/from dealers pls ensure that the Insurance formalities are in order so that neither of the owners suffer due to dealer's overlooking.