Many people can now easily own bikes through various financing options, making it more straightforward to fulfil their dream of owning their desired bike. Bike ownership can be achieved by making Equated Monthly Instalment (EMI) payments with a basic loan or with the help of financing companies. Regardless of your lender, you’ll often come across the concept of hypothecation in bike insurance. Here’s all you need to know about bike insurance hypothecation.
What Does Hypothecation Bike Insurance Mean?
Buying a bike with a loan is registered in your name at the Regional Transport Office (RTO). The RTO notes the lender’s name on the registration certificate and places a hypothecation in their favour. This means the lender owns the bike until the loan is repaid. Such hypothecation is removed once the loan is cleared. Think of it as the lender using the bike as collateral. If you default on payments, they can take it back. This helps the lender manage defaults; the registration certificate still lists you as the owner.
How To Add A Hypothecation To Your Policy For Motorbike Insurance?
Hypothecation details are crucial in your bike insurance policy, whether you’re buying a new or used bike. It’s essential for bike insurance renewal. You can provide your registration certificate to your insurer to update these details in your bike insurance. Always make sure you do your Bajaj Allianz bike insurance renewal online on time.
Documents Required For Bike Hypothecation
This is a list of all the paperwork you must bring to the RTO to have your bike hypothecated.
- Bike registration certificate
- Verification of the applicant’s address
- Completed Form 34 – the application for hypothecation.
- Bike insurance policy.
- A self-attested copy of the PAN card
- Certificate of Pollution Under Control
- A payment invoice that backs up the hypothecation
How To Take The Details Of A Hypothecation Out Of Your Bike Insurance Policy?
Bike insurance hypothecation is essential but should be removed once the loan is repaid. This involves obtaining a No Objection Certificate (NOC) from the financing company. Afterwards, inform your insurance company to remove the hypothecation details. Here are the steps involved.
- Revocation Of The Hypothecation
Bike insurance hypothecation is cancelled only after the loan is fully repaid. Ensure your bank statements show no outstanding balances, and the lending company will issue an NOC once the loan is paid off.
- Documentation
Once the loan is repaid in full, you must turn in a few documents to the RTO. This will allow them to take the hypothecation information out of the registration certificate for your bike.
- A NOC, or no objection certificate, from the lender attesting to the loan’s full repayment.
- Bike insurance policy
- A properly completed Form 35.
- Documentation Submission
To remove hypothecation details, visit the RTO where your bike is registered, bringing the required documents.
- Receipt
You must pay the RTO a small fee to remove the hypothecation. The precise cost may vary based on the state and RTO.
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