What Are the Steps to Transfer Ownership?
Before insuring a gifted car, transferring ownership through the DVLA is an unarguable step. The registered keeper is legally responsible for the vehicle, so updating this information ensures compliance with UK regulations. To do this:
- Complete section 6 of the V5C logbook, specifying the new keeper’s details.
- Both the current and new keeper must sign section 8.
- The current keeper should send the V5C to the DVLA, whilst the recipient retains the green “new keeper” slip.
For example, if a parent in Manchester gifts a car to their child, completing these steps might ensure the recipient can legally insure and drive the vehicle.
Who Needs to Arrange Insurance?
The family member receiving the car may need to arrange insurance in their own name once ownership has been transferred. It is important for the insurance policyholder to be the primary user of the car, as misrepresentation could result in invalid cover. For instance, if a sibling in Birmingham gifts their car to another sibling who could be the main driver, the new owner must secure a policy that accurately reflects this usage.
What Type of Insurance Is Required?
The type of insurance needed might depend on the recipient’s usage and circumstances. Options might include:
- Comprehensive cover for full protection, including damage, theft, and third-party liability.
- Third-party-only insurance for budget-conscious drivers, which meets legal requirements but offers limited protection.
- Specialist policies for young or inexperienced drivers, who may face higher premiums.
For example, a young driver in Bristol receiving their first car might benefit from a black-box policy to reduce costs whilst building their driving record.
How Can No-Claims Discounts Be Transferred?
No-claims discounts (NCD) cannot be transferred between individuals, even within the same family. Each driver must build their own NCD over time by maintaining a claim-free policy. However, gifting a car could provide an opportunity for a new driver to start earning their own discount. For instance, a mother in Leeds gifting her old car to her son could help him establish a driving history with a clean record, leading to potential savings in future years.
Can Temporary Insurance Be an Option?
Short-term insurance might be an option if the recipient needs temporary cover whilst arranging long-term insurance. For example:
- A sibling gifting a car in Liverpool might arrange a short-term policy for the recipient to drive it home.
- This can provide flexibility, especially if ownership transfer or permanent insurance arrangements are still in progress.
Temporary insurance policies are typically easy to arrange online, offering durations from one day to several weeks, depending on the provider.
What Factors Affect Insurance Premiums?
When insuring a gifted car, several factors might influence the premium, such as:
- The driver’s age and experience, with younger or less experienced drivers often facing higher costs.
- The car’s make, model, and value, as high-performance or luxury vehicles might carry increased risks.
- Where the car is parked overnight, with secure locations like garages generally reducing premiums compared to on-street parking.
For example, a gifted car parked in a driveway in Oxford might attract lower premiums than one parked on a busy street in central London.
What Documentation Is Needed to Insure a Gifted Car?
When insuring a car that has been gifted, the recipient might need to provide specific documentation, such as:
- The V5C logbook or the green “new keeper” slip as proof of ownership.
- Details about the car, including its registration number, make, model, and mileage.
- A valid driving licence for the policyholder.
Ensuring all necessary documents are ready can streamline the process and prevent delays in obtaining cover.
Are There Cost-Saving Measures for New Policies?
Several strategies might help reduce the cost of insuring a gifted car, particularly for young or first-time drivers. That might mean things like:
- Installing a black-box device to monitor driving habits and reward safe behaviour.
- Adding an experienced driver, such as a parent, as a named driver on the policy.
- Paying premiums annually rather than monthly to avoid instalment fees.
For instance, a new driver in Nottingham receiving a car from their uncle might see reduced premiums by opting for a telematics policy.
How Do Location-Specific Risks Impact Insurance?
Insurance premiums might vary based on the recipient’s location, as insurers assess local risks such as crime rates and traffic conditions. For example:
- A car gifted to a family member in Cambridge might carry lower premiums owing to lower crime rates.
- In contrast, a car gifted to someone in Birmingham might attract higher costs if parked in a high-traffic area.
Discussing these factors with the insurer can provide a clearer understanding of how location impacts policy pricing.
Can a Gifted Car Be Added to a Multi-Car Policy?
For households with multiple vehicles, adding a gifted car to a multi-car policy might provide cost savings and simplify management. For example:
- A family in Sheffield gifting a car to their eldest child might combine it with existing family policies.
- Multi-car policies often offer discounts for each additional vehicle, making them a cost-effective choice for families.
Checking with the insurer about eligibility for multi-car discounts might help reduce the overall cost of cover.
How Does Gifting a Car Affect Tax or Fees?
In the UK, gifting a car to a family member does not typically involve tax obligations, as private vehicle gifts are exempt from VAT. However, other costs might apply, such as:
- Updating road tax, which must be renewed by the recipient upon transfer of ownership.
- Paying for an MOT, if the car is over three years old and requires testing.
For example, a brother gifting a car in Bristol might remind the recipient to arrange road tax immediately to avoid penalties.
What Should Be Done After Insurance Is Arranged?
Once insurance is in place, the recipient should ensure the car is ready for use by:
- Confirming road tax is paid and up to date.
- Booking an MOT if necessary, especially if the car hasn’t been used recently.
- Familiarising themselves with the vehicle, including safety features and maintenance requirements.
For example, a grandparent gifting their old car to a grandchild in Plymouth might advise them to check tyre pressures and fluid levels before regular use.
Final Thoughts
Insuring a car that’s being gifted to a family member is straightforward when ownership is transferred, accurate information is provided, and the right type of insurance is selected. Whether through comprehensive cover, temporary insurance, or multi-car policies, there are options to suit various needs and budgets. Understanding the factors affecting premiums and preparing necessary documentation can simplify the process and help the recipient get on the road with confidence.
Start comparing offers today to ensure the gifted car is fully insured and ready for its new owner.