Why You Should Cancel Your RC in Case of Total Loss: Motor Insurance

Why you should cancel your RC in case of Total Loss

Do you know that you should cancel your vehicle Registration Certificate in case of total loss? If yes, it is very good. I appreciate it. But if you don’t know then you must be aware of it. Let’s assume that you have a mid-sedan car and it is damaged completely in a road accident.

The company has paid you the claim amount for total loss and scrap is sold to scrap dealer. Simultaneously, somewhere a car is stolen by a thief.

What if a thief uses your identity and documents to give a new identity to that stolen car. They may do it by forging the Engine and Chassis number.

You may be in trouble if this stolen vehicle is used in any crime. What should you do to safeguard yourself from this kind of fraud?

Why You Should Cancel Your RC in Case of Total Loss?

You must cancel your vehicle’s RC in case of total loss. What if you do not cancel your RC? A thief and fraud people can misuse your identity to give a new identity to a stolen vehicle.

They will do it by forging the Engine number and Chassis number of the stolen vehicle. But if you will cancel your RC then it will be considered as scrap by authorities.

You will be safe if anything wrong or crime happen with your identity because you have done your duty. Normally, fraud people misuse the identity of those people whose vehicle is in total loss but RC is not canceled.

So, you should avoid any delay in the cancellation of the RC. If your car or any other vehicle is completely damaged then don’t take any chance. Report to your regional transport office immediately.

Benefits of Cancellation of Registration certificate after Total Loss

It is the responsibility of the owner of the vehicle that RC is canceled on time. It is in the best interest of the owner and many other people also. The used car market is very common in India. There are many people who purchase used cars.

There are many used car dealers in India who mainly deals in used car. Cancellation of RC on time will safeguard all the people who are related to the second-hand car.

Either you are a used car dealer or buyer, you should always be careful in dealing. Check all the documents and vehicles in detail. Verify it as much as possible and don’t take any chance to get into trouble.

  • It is in the best interest of the owner of the vehicle.
  • This is in the best interest of the buyer of used car.
  • It is in the best interest of used car dealers.

IRDA

IRDA has issued guidelines regarding the Total loss claim. It has properly mentioned in his circular that “documents pertaining to such vehicles are being misused- like giving a new identity to the stolen vehicles by forging engine number and chassis number of destroyed vehicles under Total loss (TL) claims.”

IRDA has issued a guideline for all general insurance companies excluding standalone health insurance companies to ensure cancellation of Registration Certificate of the vehicle in case of total loss claim settlement.

How to Cancel Registration Certificate?

You can cancel your registration certificate by submitting a request letter and the required document to registering authority.

According to section 55 of the motor vehicle act you must report within 14 days if a motor vehicle is completely damaged or is rendered incapable of use. Normally, you have to submit following document to cancel your RC-

  • Application Letter for cancellation
  • Original Registration Certificate
  • FIR Copy
  • Insurance Policy Copy
  • Driving License
  • Photograph
  • Any other if required

Your application will be processed by the authority. You should submit your document to the original registering authority with which it was registered. So, that you don’t get any kind of delay in the process.

What is Total Loss?

The chance of fraud begins when a vehicle is under Total Loss and cancellation of RC not done. Normally, the Situation of Total Loss arises in case of fire or severe accident of the vehicle.

If your vehicle’s overall repair cost is more than 75% of the Insured Declared Value (IDV) then it is Total Loss.

Your insurance company will settle the claim as Total Loss Claim if the repair cost is more than 75%. In this case you should process the cancellation of RC on time.

When you get any confusion then you should discuss with your insurance company and concern authority.