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Insurers must ensure RC is cancelled in case vehicle is damaged beyond repair

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If a vehicle is destroyed, is rendered incapable of use, the owner shall report this within 14 days to the registering authority to get the RC cancelled

In case of an accident or theft of a vehicle, you would usually think of making an insurance claim. But is that enough, especially if your vehicle is severely damaged and you need to sell the remains to a scrap dealer?

You can make a claim in case of an accident where the total cost of repair is more than 75 per cent of the insured declared value (IDV). IDV is the approximate market value of your vehicle at the time of filing the claim. But apart from making a claim, there are other loose ends you should tie up before selling the remains of a destroyed vehicle.

In a circular issued recently, the Insurance Regulatory and Development Authority of India (Irdai) noted that it had been informed about the misuse of documents of vehicles that are sold to scrap dealers. There have been cases where thieves have forged the engine and chassis numbers of vehicles that are sold to scrap dealers and used them to create fake identities of vehicles they may have stolen. However, if the documents are indeed misused, the owner in whose name the vehicle is registered can fall into trouble. So what should you do if your vehicle gets stolen or is severely damaged after an accident?

Section 55 of the Motor Vehicle Act 1988 states that if a motor vehicle is destroyed or is rendered incapable of use, the owner shall report this within 14 days to the registering authority within the jurisdiction of her residence or place of business where the vehicle is usually kept, and forward the certificate of registration (RC) to such authority. If it is the original authority with which the vehicle was registered, it will cancel the RC; if not, it will forward the RC to the original registering authority.

While there is no penalty for cancellation of RC, Irdai has strictly instructed insurers to ensure it is cancelled in cases where policyholders file a claim for total loss and settle the claim thereafter.
As a vehicle owner, you must take this exercise seriously and get the RC cancelled to ensure no serious crime is committed using your vehicle’s

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