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While presenting the budget in February 2021, the Ministry of Road Transport and Highways implemented the Vehicle Scrappage Policy. As per this policy, all the vehicles whose registration certificate has expired must pass a fitness test before the RC is renewed. The main objective of this policy is to keep the old and unfit vehicles off the road and keep the vehicle-related pollution under check.

In the wake of the increasing risk of global warming, the introduction of this policy is considered a welcome move in paving for a cleaner and greener environment. If you have an old car that has an expired registration certificate or is nearing the expiry date, you can either renew the RC or scrap the car. If you choose to scrap your car, you must be aware of its impact on the car insurance policy.

Impact of scrapping the vehicle on car insurance policy

As per the Motor Scrappage Policy, all vehicles that are older than 15-20 years, depending on the type of vehicle, if they fail the fitness test, must be deregistered and scrapped.

• When the unfit or old vehicles are scrapped, the manufacturers get access to usable industrial materials like rubber, steel, copper, aluminium, etc. Recycling these materials reduces the manufacturing cost of the vehicle, thereby reducing the overall vehicle cost.

• With the lower vehicle cost, the car insurance cost would also come down as the IDV (insurance declared value) of the car would be low. IDV is one of the important factors that the insurance companies consider while determining the insurance premium.

• Whether you buy car insurance online or offline, the premiums are regulated by IRDA (Insurance Regulatory and Development Authority) yet the number of third-party claims filed every year are high. If the old cars are scrapped, the number of third-party claims is expected to reduce as the unfit cars will be off the road.

Importance of cancelling the RC after scrapping the car

If you decide to scrap your old car or if it is completely damaged, you must cancel the RC. If you are wondering why, it is important to cancel the RC, here are the reasons:

When you scrap the car and don’t cancel the registration certificate, criminals might misuse the car documents and use it for illegal activities. Generally, people use the documents of the scrapped car to give a new identity to the stolen cars. But, if the RC of the scrapped car is cancelled, fraudsters cannot misuse the documents.

If you don’t cancel the RC of your scrapped car, and the fraudsters misuse the vehicle, you may get into serious legal trouble. Hence, as a car owner, it is your primary responsibility to cancel the registration certificate of the scrapped car.

Documents required to cancel the scrapped car’s RC

To cancel the RC of your scrapped car, you must furnish the following documents to the Regional Transport Office.

• Original RC of the scrapped car

• Proof of your car being scrapped, i.e., the cutting of the chassis number

• Copy of the car insurance policy

• An affidavit stating that your car is scrapped

• Copy of the latest PUCC (pollution under control certificate) of the scrapped vehicle

Important things to remember while cancelling the RC of the scrapped vehicle

• After you have scrapped your old or damaged car, you must inform the regional RTO about it and raise a request for cancelling the RC within 14 days of scrapping the car.

• After you inform the local RTO about the scrapping of the vehicle, and submit the necessary documents for cancelling the RC, they would inform the local police and get a clearance.

• The local RTO will also forward the RC and the reports to the original RTO where you registered the vehicle.

• The original RTO will then cancel the RC and issue a non-utilisation certificate for the car.

Cancelling the RC of the scrapped vehicle is an important step you must take to steer your name, clear of any illegal activities and be on the right side of the law.

Disclaimer: The content provided is for education and informational purpose only, none of the information contained in our blog amounts to any form of opinion or advice. Please go through policy related documents carefully or consult an expert before making any insurance-related decisions.


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