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      Why Should You Cancel Your RC After Scrapping Your Car?

      In case there is an accident leading to partial car damage or a total loss, then you must cancel your car's Registration Certificate (RC).Learn more about RC cancellation and documents required during the process.

      Read more

      What is the Total Loss of a Car?

      In motor insurance, the total loss of a car is when the cost of repairing a car is more than 75 percent of the insured declared value or insured cost of the car.

      The insured declared value or IDV of a car refers to the maximum amount that the insured can claim for the loss or damage. Thus, if the insurer is required to pay more than three-fourths of the total IDV towards the repair of your car, it is considered a case of total loss in car insurance.

      The total loss of a car can take place due to an unforeseen incident, such as an accident, fire, calamity, or theft. In case of a total loss, your motor insurer will pay the IDV as the maximum claim amount under your comprehensive car insurance policy.

      However, the concept of the total loss of a car does not apply to third-party insurance as it only covers the own damages.

      Furthermore, if the cost of repairing your car is more than 100 percent of the total IDV, then it is known as the constructive total loss of a car. In this case, too, your motor insurer will pay the full IDV as the compensation amount for the replacement of your car.

      What Should You Do in Case of Total Loss of Your Car?

      In case your motor insurer has declared your car as a total loss and it is incapable of use, you have the option of selling the remains of the damaged car to a scrap dealer. The scrap dealer breaks down the remains of the car for recycling.

      If you sell the remains of your damaged car to a scrap dealer, you have the legal responsibility to get the registration certificate or RC of your car cancelled.

      According to Section 55 of the Motor Vehicles Act, 1988, it is the responsibility of the car owner to get the RC of his/ her car cancelled in case the vehicle has undergone a total loss. Here are the steps that you should follow if your car is declared as a total loss-

      • You should inform the Regional Transport Office (RTO) holding jurisdiction of the area about the total loss of the car within 14 days.
      • When you inform your RTO about the total loss of your car, the RTO will cancel the RC of your vehicle.
      • With the cancellation of the RC, your car is considered scrap and has no longer in existence. Moreover, your vehicle cannot be registered to someone else.
      • Once you receive the clearance from the police, the RC cancellation will be done. Also, your RTO will inform you and issue a non-utilisation certificate for your car within 4-5 weeks.

      Note- Since the RC is cancelled by the RTO of the state where you reside, the rules and cancellation fee will vary from one state to another.

      Significance of Cancelling the RC in Case of Total Loss of Car

      It is crucial to cancel your RC if your vehicle has suffered from a total loss. Take a look at the reasons why getting the RC cancelled is important if your car is getting scrapped-

      1. Prevent its Misuse by the Fraudsters

        When a car gets completely destroyed in an accident or due to other unforeseen events, the vehicle owner often sells the remains of the vehicle to a scrap dealer. If the RC of the scrapped vehicle is not cancelled, criminals might misuse the car documents.

        Generally, such people use scrapped car documents to give a new identity to stolen cars or used them for illegal activities. But if the RC of the scrapped car has been cancelled, such fraudulent people will not be able to misuse its documents.

      2. Prevent Legal Troubles

        If you fail to cancel the RC of your scrapped car, a fraudster or thief might misuse that vehicle for a criminal or illegal purpose. This might get you into some serious legal troubles. Henceforth, as a car owner, it is your responsibility to cancel the car's RC after the scrapping.

      About Vehicle Scrappage Policy

      Under the Union Budget 2021, the Government of India announced the Vehicle Scrappage Policy. Under this, private vehicles have to go through the fitness test after 20 years from the date of purchase, and commercial vehicles need to conduct this test after 15 years.

      If a vehicle is found to be unfit to run on the roads, the owner needs to scrap it and receive incentives from the Government. The objective of this policy is to eliminate the unfit vehicles running on the road and reduce the air pollution in emitting the environment.

      If your vehicle qualifies for the vehicle scrappage policy, you must scrap it, receive an incentive from the government, and cancel its RC.

      How Can You Cancel the RC?

      In case your motor insurance company has written off your car, declares it as a total loss, or qualifies the vehicle scrappage policy, you can initiate the process of cancelling your RC by following the procedure given below-

      • Sell your car to a scrap dealer
      • The dealer will give you the chassis number of your scrapped car that is cut off. It will act as proof of scrapped car
      • Get an affidavit made that specifies that your car has been scrapped off
      • Inform your RTO having jurisdiction about the scrapping of your car
      • Submit all the mandatory documents to the RTO for cancelling the RC
      • The RTO will obtain clearance from the local police, and they will cancel the RC
      • Also, the RTO will forward the RC and the report to the 'original RTO' from where the car was registered
      • The original RTO will cancel the RC and you will be informed about the cancellation of your RC
      • The RTO will give you the non-utilisation certificate for your scrapped car.

      Documents Required to Cancel Your RC

      To cancel the RC of your damaged car, you need to provide the following documents-

      • RC of the scrapped car
      • Proof of your car being scrapped i.e. cutting off the chassis number
      • An affidavit stating that your (owner’s) car is being scrapped
      • Comprehensive insurance policy for your car
      • Pollution Under Control (PUC)certificate of your scrapped car

      Summing It Up

      If your car gets totally destroyed due to unforeseen incidents, such as accidents and fire, and the insurer declares it a total loss and you can sell your car for scrap. However, it is your responsibility to inform the RTO for the cancellation of RC within 14 days of scrapping your car.

      Moreover, ensure you have a comprehensive car insurance policy to ensure a smooth RC cancellation process and receive full IDV as the compensation amount under total loss in car insurance.

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