Cancel the RC of the Commercial Vehicle After Scrapping It: Its Importance & How to Do It?

Commercial vehicles play a huge role in urban cities. Not everybody can afford to purchase a car when it comes to travel from one city to another or even inside the city. Even before the new age, start-up companies like OLA & Uber were not used as a mainstream medium for travelling, people use to book cabs based on price per kilometer. The cab owners also have to make sure to protect their vehicles like cars, vans, autorickshaws, etc. with a commercial vehicle insurance policy from any unforeseen accident.

Read more
Buy instant insurance for Goods, Passenger & Miscellaneous vehicles
  • 18+ insurers to choose from

  • Instant renewal for expired policy

  • Cover lamp, tyre Tube & bumper

Save upto 80% on Commercial Vehicle Insurance*
View free quotes
Please wait. We Are Processing..
By clicking on ''View free quotes'' you agreed to our Privacy Policy and Terms of use

*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply

As the safety of the commercial vehicle lies in the hands of its owner, there are two types of insurance policy options available. One is third-party liability insurance and the other one is a comprehensive insurance policy. However, it is mandatory to have third-party liability insurance but to get overall protection for the commercial vehicle, owners are advised to purchase the comprehensive plan too.

You can take all kinds of precautions to make sure that your commercial vehicle stays protected but sudden incidents like a manmade disaster, theft, fire seem to be inevitable. But you do not know until the damage is done as it has damaged the vehicle partially or total loss of the commercial vehicle. Whereas partial damage can be repaired but a total loss cannot.

What Happens in Total Loss of Vehicle Situation?

In the motor insurance policy, the term total loss of the vehicle is used in the situation when the cost of repairing the vehicle is more than 75% of the insured declared value. The maximum amount that the insured person can claim from the insurance company is known as IDV or Insured declared value.

If the insurance company has to pay more than the 3/4th amount of total IDV for the repairing of the vehicle known as the total loss of the commercial vehicle.

The total loss can happen in fire accidents, natural calamities, or theft. The insurance company under the comprehensive insurance policy pays the Insured declared value as the maximum amount. This feature is not available in third-party liability insurance.

If the cost of repairing your damaged commercial vehicle is 100% of the total insured declared value then it is known as a constructive total loss. The insurer will pay the IDV in full for replacing your commercial vehicle.

What to Do In Case of Total Loss?

When your insurance provider declares your damaged vehicle as disabled to use permanently, you can sell the remaining parts of the vehicle to the scrap dealer. When you do this, then you are responsible to get the registration certificate of the scrapped commercial vehicle cancelled.

This is not just because of the identity theft of the scrapped vehicle but it mandatory as per Section 55 of the Motor Vehicle Act, 1988. The scrapped vehicle owner must get the registration certificate cancelled when the vehicle has been declared as a total loss vehicle.

The commercial vehicle owner has to inform the RTO that has the jurisdiction of the area of the commercial vehicle’s location within 14 days. When you inform the RTO, they will initiate the process and cancel the Registration Certificate of the commercial vehiclec. After the cancellation of the RC, the commercial vehicle will no longer exist and it will not be registered to anyone else.

After the cancellation your RTO will issue a non-utilization certificate for your scrapped vehicle within 4-5 weeks. The cancellation fee will depend on that particular state’s RTO.

Importance of Cancellation of RC

Cancelling your scrapped vehicle’s RC is an important thing n case of total loss. Here are some reasons mentioned that show the importance of cancelling the RC.

Misuse of Documents

When the vehicle gets destroyed completely, you have to sell the remains to a scrap dealer. If you do not cancel the RC of that scrapped commercial vehicle, thieves and fraudulent can misuse the documents of the scrapped vehicle.

They can use these documents to create a new identity of a stolen vehicle or a vehicle that they plan to use in illegal activities. If you cancel the RC then the misuse of the documents cannot take place.

Prevent Theft

When a scrapped vehicle is sold to the scrap dealer, the thieves and criminals utilize it as an opportunity and change the identity of the stolen vehicle. The thieves hide the stolen commercial vehicle in plain sight. They use the details of the scrapped vehicle and make an illegal copy of the documents and use it in making an illegal vehicle legal.

However, these kinds of activities can come to an end if the vehicle owner cancels the RC of the scrapped vehicle.

How to Cancel the RC?

When your insurance company declares your vehicle as a total loss then you have to initiate the cancellation process of your RC. You can follow the steps mentioned below:

  • First of all, sell the scrapped vehicle to a scrap dealer.
  • You will be provided with the chassis number of the vehicle that they will cut off the scrapped vehicle.
  • It will be proof that the vehicle has been scrapped.
  • Get an affidavit for your scrapped vehicle.
  • Inform the RTO of the scrapping of the vehicle.
  • Submit the required documents in the RTO.
  • RTO will get the confirmation from the police and the police station having jurisdiction of your area will cancel the registration and RC.
  • Then the police station will forward the report to the RTO, where the commercial vehicle was originally registered.
  • Then RTO will cancel the RC once and for all.
  • Then they will inform you about the cancellation
  • After this, they will send you a non-utilization certificate within 4-5 weeks.

Documents to Provide for Cancellation to RTO

You have to provide the following documents to initiate the cancellation process:

  • Registration certificate
  • As proof, you will have to provide the cut off of chassis number that the vehicle has been scrapped
  • An affidavit that states the vehicle has been scrapped.
  • Insurance policy whether third-party or comprehensive.
  • PUC certificate of the vehicle

Important Things to Keep in Mind to Get the RC of the Vehicle Cancelled

When you decide to get the RC of the vehicle cancelled, then you will have to keep these things in mind.

  • Request the RTO to cancel the RC of the vehicle within 14 days of scrapping it.
  • Make sure you have comprehensive insurance along with a third party for a hassle-free RC cancellation process.
  • Make sure that the insurance policy has been renewed on time to get the advantage in case of total loss.


It is important to get your scrapped vehicle’s RC cancelled as it can be utilized in illegal activities and you will be held as the victim. Also, it is important that you have a comprehensive commercial vehicle insurance policy to make the cancellation process smooth. You can purchase the comprehensive plan online. It is recommended by the experts to purchase the policy online as it is cost-effective and you can even calculate the premium rates online using an online premium calculator.

You May Also Like
  • Beginner’s Guide - Auto-rickshaw Insurance

    Running a business, which requires the usage of commercial vehicles, is a common sight in India. Besides, having the right commercial vehicle insurance is recommended and is useful to ensure the smooth operation of...

  • All you need to Know about Third Party Commercial Auto Insurance

    A third-party commercial vehicle insurance policy covers risks arising due to third party liabilities such as third-party vehicle damage, third-party bodily injury. It offers the desired protection in the event...

  • All about Commercial Vehicle Insurance in India

    Compared to old times today the business operates efficiently as we have excellent modes of transportation. If a vehicle is providing you with an income of livelihood you definitely will not want in anything happening...

  • 7 Things You Should Know About Commercial Vehicle Insurance

    When you own a business, you already have a lot on your plate to think about which leads to anxiety and stress. Buying commercial vehicle insurance will secure you from any commercial vehicle perils that may happen...

  • List of Motor Add-On covers Proposed to be filed with IRDA

    The insurance companies in India offering motor insurance policies need to adhere to the guidelines formulated by the Insurance Regulatory and Development Authority. If you anticipating buying motor insurance, it is of...

Disclaimer: Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by an insurer.
Sign up for newsletter
Sign up our newsletter and get email about commercial vehicle plans.