Most of the automobile dealers are selling their vehicles with insurance. There is hardly any buyer who buys insurance policy directly from the insurance companies and then take delivery of the vehicle. Recently a case has come where the vehicle was sold to a buyer with insurance amount charged. However, when the buyer approached the insurance company after one year for its renewal, he was informed that his vehicle is not insured as the dealer did not pay the insurance premium. While it was a purely fault of the insurance company as well for not informing the buyer about non-release of payment, but the insured should have suffered a lot had the vehicle met an unfortunate even whether accident or theft. Few advises:
1. You can buy directly from the insurance company the insurance policy for the vehicle under purchase. This would also result in saving if you have any No claim bonus arising out from the previous vehicle.
2. There is no term like free insurance in real terms. The dealers are just making fool the public by showing that the insurance premium is free.
3. Even if you are buying vehicle from the dealer with insurance paid, it is in your own interest to confirm the policy from the insurance company of having paid the insurance premium and its genuineness. more  

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Now a days most of the policies you can cross check on line. After getting the policy, please visit the respective insurance company site and register your policy, you will know, whether it is fake or true. If, you are not able to register or view on line, please immediately approach concerned insurance company (not the dealer). They will tell you the truth. If, fake take appropriate action. more  
Don't go thro' a middle man do it your self and don't trust any body even your closest person. more  
Dear Shri Mani Iyer, I agree with Shri S K Virmani, this is not rare Case, I personally know many buyers who paid the Motor Insurance Premium to Dealer & Couldn't get policy & after repeated Follow ups, they could get insurance effective from the later date, i.e not from the date of Purchase. more  
Dear Mr. Mani Iyer, I think this may not be a case in isolation. Please see the comments of Shri Sharfddin Syed and Shri Chandra Prakash Sharma. Moreover, one cannot rule out the chances of such scams as most of the people may not be getting noticing. The affected person can feel only at the time of renewal or at the time of lodging claim. There is no harm if the buyer checks at the time of purchase the effectiveness/genuineness of the insurance policy provided to him by the automobile dealer. Anyhow prevention is better than cure more  
Virmaniji, this appears to be a rare case. This seldom happens. The days of cover notes are gone. Insurance policy is issued directly. If what you say has happened, buyers of new vehicles should cross check with the insurance company immediately after purchase of vehicle. I feel that dealers arranging for insurance is OK since mishaps can happen before we reach home or our insurance agent by driving away with the new vehicle more  
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