Why Should You Cancel Your RC After Scrapping Your Car?
Cars are one of the most prized possessions that money can buy. It provides people with luxury, convenience and gives them a sense of achievement. Buying a car from your own money is considered a major milestone in life. After all, cars are expensive and one needs to spend a lot of money to afford to buy a car. That is one of the major reasons why you take all possible precautions, such as buy a car insurance policy, to keep your car financially secured.
The safety of your car can be ensured using either of the two types of car insurance plans - third party insurance and comprehensive car insurance. With a third party insurance policy, your motor insurer will provide financial assistance against your legal liabilities arising out your car for causing injuries or property damages to third parties. The motor laws of the country mandate every car in India to be covered under at least a third party insurance policy.
Besides third party insurance, you can also buy comprehensive insurance for your car that provides broader coverage by offering financial aid against any damages sustained by your vehicle in addition to third party liabilities. No matter which type of policy you buy, car insurance renewal is important to ensure continued protection of your car.
Despite all the precautions you may take to keep your car safe, you cannot prevent unforeseen incidents, such as fire, manmade disasters, natural disasters, accidents or theft from happening. When an unforeseen incident with your car takes place, it can either damage your car partially or can lead to the total loss of your car.
What is Total Loss of a Car?
In motor insurance, total loss of a car refers to the situation where the cost of repairing a car is more than 75 per cent 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 from the motor insurance company for the loss or damage of his/ her car. Thus, if the insurer is required to pay more than three-fourth of the total IDV towards the repair of your car, it is considered as a case of the total loss of the car.
The total loss of a car can take place due to an unforeseen incident, such as an accident, fire, calamities or theft. In case of the total loss of your car, 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 this type of car insurance does not cover own damages of a car.
In case the cost of repairing your car is more than 100 per cent of the total IDV, then it is considered as the constructive total loss of a car. In this situation too, your motor insurer will pay the full IDV as the claim amount for the replacement of your car.
What Should You Do in Case of Total Loss of Your Car?
In case you’re motor insurer has declared your car as a total loss and permanently 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 the purpose of recycling. If you do 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 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. The car owner should inform the Regional Transport Office (RTO) holding jurisdiction of his/ her area about the total loss of the car within a period of 14 days. When you inform your RTO about the total loss of your car, your RTO will cancel the RC of your car. With the cancellation of the RC, your car is considered as scrap and no longer in existence. Moreover, your vehicle will not be registered to someone else.
The RC cancellation process will be completed only after clearance is received from the police. Once the RC is cancelled, your RTO will inform you and issue a non-utilization certificate for your car within four to five weeks. Since the RC is cancelled by the RTO of the state in which you stay, the rules as well as the cancellation fee will vary from one state to another.
Why Is It Important to Cancel the RC in Case of Total Loss of Car?
It is extremely important to get the RC of your car cancelled in case your vehicle has suffered from a total loss. Take a look at the reasons why getting your car’s RC cancelled is important if your car is getting scrapped:
Misuse of Damaged Car Documents
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. In case the RC of the scrapped vehicle is not cancelled, criminals and fraudulent people misuse the documents of the car. Such people use the documents of the scrapped cars to give a new identity to stolen cars or a car which is being used for illegal activities. But if the RC of the scrapped car has been cancelled, such fraudulent people won’t be able to misuse its documents.
Prevent Vehicle Theft
When a car is sold to a scrap dealer without getting its RC cancelled, criminals see it as an opportunity to switch the identity of a stolen car. When a car is stolen, the robbers hide the stolen vehicle in plain sight by changing its identity. They use the details of a scrapped car to forge the engine and chassis number of the stolen car. As a result, they get successful in giving a new identity to a stolen car that motivates them to steal more cars. However, these fraudulent activities can be put to an end to some extent if you cancel the RC of your scrapped car.
How Can You Cancel Your RC?
In case your motor insurance company has written off your car or declared it as a total loss, 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 has been cut off. It will act as the proof of your car being scrapped
- Get an affidavit made that specifies that your car has been scrapped off
- Inform the RTO having jurisdiction over your area about the scrapping of your car
- Submit all the required documents to the RTO
- The RTO will obtain clearance from the local police and they will cancel the registration of your car and its RC
- They will forward the RC and the report to the original RTO where the car was registered
- The original RTO will cancel the registration certificate
- You will be informed about the cancellation of your RC
- The RTO will give you the non-utilization certificate for your car
Documents Required to Cancel Your RC
To order 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 of the chassis number
- An affidavit stating that your (owner’s) car is being scrapped
- Third party insurance or comprehensive insurance policy of your car
- Pollution Under Control certificate of your scrapped car
Things to Keep in Mind While Cancelling the RC of Your Car
If you are getting the RC of your car cancelled due to total loss, you need to keep the following things in mind:
- Inform the RTO and request for your damaged car’s RC cancellation within 14 days of scrapping your car
- You must have a comprehensive car insurance policy with third party insurance cover for your car to ensure smooth RC cancellation process
- Ensure car insurance renewal to raise a claim in case your car gets destroyed
Summing It Up
Most people are emotionally attached to their cars and spent a lot of their savings to purchase them. They financially secure their cars with comprehensive or third party insurance and ensure timely car insurance renewal. It can be heartbreaking for such people to see their car getting completely destroyed due to unforeseen incidents, such as accidents and fire. In case your insurer declares your car as a total loss, you can sell your car to a scrap
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