If unfortunately, your vehicle has been in an accident that has resulted in it being completely destroyed, rendered incapable of use, or it has been stolen, it is called a total loss.

In such a circumstance you would usually think about making an insurance claim, but is that enough?

When your vehicle is severely damaged, apart from making a claim, there are many other loose ends you would need to tie up before you sell off the remains of your destroyed vehicle.

One of the most import things is that you must do is to ensure that your RC (Registration Certificate) is cancelled. 

In insurance, a vehicle is said to be at a total loss when the cost to repair it is more than 75% the insured cost of the vehicle – or its Insured Declared Value (IDV).

The vehicle’s IDV is the maximum amount that you can claim under your vehicle insurance policy after an accident or theft, and it is calculated based on the manufacturer’s selling price of the vehicle (minus any depreciation).

Your vehicle’s RC, or its Registration Certificate, is the official document that confirms that your vehicle has been registered with the Indian Government. You can get this from the local RTO, or from your Motor Dealer also.

Generally, your RC is valid for 15 years from the date of issue and mentions its specific details and the territorial boundary in which the vehicle can be used.

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Hopefully, it never happens to you, but if your vehicle is in a terrible accident, you will probably be prepared to sell what remains of it to a scrap dealer.

If you happen to do this without cancelling your Registration Certificate (RC), there can be some serious consequences.  

The Insurance Regulatory and Development Authority of India (IRDAI) has noticed that these documents can be misused by fraudsters to give a new identity to some totally unrelated stolen vehicles! When this fraud occurs, the owner (that is you) may fall into trouble. 

Of course, you don’t want that to happen, so Section 55 of the Motor Vehicle Act 1988 and the IRDAI have both mandated that for a destroyed vehicle that has undergone Total Loss you must get the Certificate of Registration (RC) cancelled within 14 days.  

It is a very simple process to get your RC cancelled to avoid any unnecessary troubles:

• You, or whoever’s name the vehicle is registered under, need to report the totally damaged condition of your vehicle to the State Regional Transport Office (RTO), within 14 days.
• After getting clearance from the police department, the RTO will start the process of cancelling your RC.
• Within four to five weeks, they will issue a certificate of non-utilization and the certificate will have been considered as cancelled. 

If you have moved from one state to another, you should notify the registering authority within the jurisdiction of your residence and they will forward the RC to the original registering authority.

And the moment your RC is cancelled, your vehicle will be considered as scrap and it will no longer be registered to anyone. 

Since this entire process is carried out by the State RTO, the fees and sales will vary from one state to another. 

While there is no penalty for not cancelling your RC, the IRDAI is quite strict with its instructions to insurers to ensure it is done before you file a claim for total loss and before that claim is settled.

So, now that you know the importance of cancelling your RC within 14 days in case of total loss of your vehicle, remember to follow the correct procedure if you ever need to (and we hope that you don’t!).

As a vehicle owner, you must take this seriously and get your RC cancelled to ensure no serious crime is committed using your vehicle’s registration details and to avoid any legal trouble in the future.