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Why You Should Cancel Your RC within 14 Days if Your Car is Completely Damaged?

IRDAI instructs vehicle owners to cancel their certificate of registration (RC) within 14 days if their vehicle is completely damaged or rendered to be incapable of use.

You might have certainly heard this news if you stay updated with current affairs. Isn't it? But have you ever thought what made the insurance regulator take such a serious step? Here in this article, we are going to explore the inside story of IRDAI's decision and the role it plays at the time of settling a car insurance claim​. So, let's get started. 

Why IRDAI Demanded RC Cancellation within 14 Days?

In extreme cases of accidents, where the vehicle gets completely damaged, the owners tend to sell the remains of the destroyed vehicle to the scrap dealers. They do make a claim, but they neglect the repercussions they can face by selling their car parts to a scrap dealer.

IRDAI noticed misuse of RC details of the destroyed or total loss vehicles that were sold to scrap dealers. It clearly mentioned in its circular that “Documents pertaining to such vehicles are being misused — like giving new identity to stolen vehicles by forging engine number and chassis number of destroyed vehicles under total loss (TL) claims."

This clearly states that the thieves create fake identities of stolen vehicles using the RC details and other related documents of your 'total loss' vehicle. Upon misuse of documents, the owner (that is you) may fall into trouble.

So, what to do in case the car is completely damaged?

According to the Motor Vehicle Act 1988, one must report to the registering authority, within 14 days, about the completely damaged condition of his/her vehicle. So, now when you find that your vehicle is permanently incapable of use, you know what exactly to do. Upon receiving your request, the registering authority in your residence's jurisdiction will cancel the RC.

The moment your RC is cancelled, the vehicle will be considered as scrap and will no longer be registered to anyone. This legal process is carried out by the State Regional Transport Office (RTO). Therefore, the fees and sales vary from one state to another. After obtaining clearance from the police department, the RC cancellation process will be completed. Simultaneously, the State RTO will issue a certificate of non-utilization within a period of four to five weeks. While you plan to buy car insurance policy, do a bit of research on your end to understand the RC cancellation process and everything related to 'total loss' vehicles.

Last but not the least, stay clear on the concept of 'total loss' of vehicles. While claiming for total loss, you should understand that your vehicle will be certified as a 'total loss' vehicle only if the repair cost is more than 75% of the Insured Declared Value. This is the maximum amount that an insurer can claim on motor insurance for compensating any losses incurred due to accident or theft.

So, when you know the importance of RC cancellation within 14 days, make sure you follow it and inform your acquaintances about it.