Why is it Important to Cancel Your RC After Scrapping Your Car

Buying a car is like a dream come true for many. It provides them with a feeling of pride, luxury, and achievement. After all, a person spends a considerable chunk of his/her savings to buy a car and keep it in top condition. That is why, every responsible car owner chooses to get financial security for his/her car with a comprehensive car insurance policy.

However, despite of all the precautions you take for your car, you can never rule out the possibility of an unforeseen mishap such as fire, theft, road accident etc. These incidents can either damage your car partially or can lead to its total loss, in which case you must mandatorily cancel your car’s Registration Certificate (RC).

What is total loss of a car?

As per motor insurance terms, total loss of a car refers to a situation where it gets damaged to such an extent that it cannot be repaired again. Or, if the cost of repairing a car is more than its Insured Declared Value (IDV), the car is said to be in a state of total loss. In such cases, the insurance company pays the full IDV of the car to its owner and sells the car to a scrap dealer.

The total loss of a car can take place due to an unforeseen mishap, such as road accident, earthquake, flood, tsunami, fire, theft, etc.

What is the registration certificate of a car?

The Registration Certificate or RC of a car is an official document that is provided to the car owner after its registration. A car’s RC basically states that it is registered with the Indian Government and is, hence, fit to be driven on roads. It contains the unique registration number of a car, its engine and chassis number, name of the car owner, and the expiry date of the RC.

You can get your car’s RC either from the Regional Transport Office (RTO) where you’ve registered your car or you can download it from the Government’s “Parivahan Seva” portal.

Why is it important to cancel your car’s RC in case of total loss?

In case of total loss of a car, the insurance company pays the IDV to the car owner and sells the remains of the car to a scrap dealer. The scrap dealer then breaks down the remains of the car into small pieces and use them for the purpose of recycling. After the car is scrapped, the car owner needs to get the registration certificate of his/her car cancelled.

As per Section 55 of the Motor Vehicles Act of 1988, it is the responsibility of the car owner to cancel the RC of his/her car after scrapping it. He/she needs to inform the RTO about the scrapping of the car within 14 days to get its RC cancelled.

Below are the reasons why you must cancel your car’s RC after scrapping it

Prevent its misuse by fraudsters

In case of total loss of a car, it is sold to a scrap dealer and can never be used again by the owner. In case the RC of the car is not cancelled after it is scrapped, it can be used by criminals and fraudsters to give a new identity to a stolen vehicle and use it for illegal activities.

Prevent vehicle theft

When you fail to cancel your car’s RC, vehicle thieves get a chance to change the identity of a stolen vehicle by forging its engine and chassis number. As a result, they get motivated to steal more cars. However, such activities can be prevented to an extent by cancelling your car’s RC.

Avoid legal troubles

As mentioned above, it’s the responsibility of the car owner to get the RC of his/her car cancelled after its scrapping. In case you fail to do so, a fraudster can use your car’s identity for a car that’s used for criminal purposes. This may bring serious legal troubles for you in future.

Vehicle Scrappage Policy announced by the Government of India

Vehicle scrappage policy was one of the several measures announced in Union Budget 2021. Under this policy, personal vehicles would have to undergo a fitness test after 20 years, while commercial ones would need to take this test after 15 years.

In case a vehicle is found to be unfit to run on roads, the owner can choose to scrap it and receive incentives from the Government. The aim of the policy by the Government of India was to reduce air pollution in the country and increase fuel efficiency of cars.

In case your car qualifies for the vehicle scrappage policy of India, you can scrap your car and cancel its RC, like the case of total loss.

How to cancel your car’s RC?

Below are the steps in which you can cancel the RC of your car:

1. Click photos of your scrapped car
2. Get an affidavit stating that your car has been scrapped
3. Inform the RTO about the scrapping of your car
4. Submit all required documents to the RTO
5. The RTO will obtain a clearance certificate from your local police station
6. You will be informed about the cancellation of your car’s RC
7. The RTO will cancel your car’s RC and you will be provided with a non-utilisation certificate for your car

The final word

You must inform the RTO within 14 days of scrapping your car to get its RC cancelled. Also, you should procure a comprehensive car insurance policy to ensure smooth RC cancellation procedure of your car in case of its total loss. Lastly, don’t forget to renew your car insurance policy on time to file a claim on it in case of total loss of your car.