Having a two-wheeler is convenient for many and luxury for some. People choose various bike insurance policies and add-ons to protect their bikes against unforeseen circumstances. One must have comprehensive bike insurance for maximum financial protection against vehicle damage and third-party claims. In the case of any mishaps like a fire, road accident, etc., the bike is damaged. And if the bike is stolen, you know the implications then. Such circumstances can damage your motorcycle partially or can cause total damage. Cancelling the bike's RC (registration certificate) is mandatory in such situations.
What is the Total Loss of a Vehicle?
Total loss is defined mainly when the bike is either stolen or has gone beyond the point of repair. Stolen bikes cause a complete loss. In case of damage beyond repair, it is called a total constructive loss. It can happen in any unfortunate event of earthquake, fire, tsunami, flood, etc. When such a situation arises, the insurance company pays the policyholder the IDV and then takes away his vehicle and sells it to the scrap.
What is the Registration Certificate for a Bike?
A bike registration certificate is when the bike owner registers his/her bike at an RTO. This document proves that the bike is registered with the government and is deemed suitable for driving on roads. An RC document serves as the identity proof for your bike.
An RC document comprises the unique bike registration number, its engine and chassis number, the owner's name, and the document's expiration date. It will help identify the ownership of the bike and will provide for the unique identification of your bike.
You can get this from an RTO office or download it from an online portal once you have registered your bike.
What Happens After You Give Your Vehicle in Scrap?
After disbursing the IDV amount, the bike insurance company takes the vehicle from you and gives it to a scrap dealer. This scrap dealer then breaks down the vehicle's remains into tiny parts and keeps them to reuse or recycle.
Under Section 55 of the Motor vehicles Act of 1988, a vehicle owner must cancel his RC after giving his two-wheeler to scrap. The owner needs to inform the RTO about the bike scrapping within 14 days to get the RC cancelled.
Reasons to Cancel Your Bike RC After Scrapping
Cancelling your RC after giving your vehicle into scrapping is mandatory as it immunes you legally and financially should any fraudulent activity happens with the particular bike.
Let's understand the reasons to cancel your RC after scrapping it in brief:
Prevent Misuse of the Vehicle by Fraudsters
When the vehicle is stolen or damaged, it can no longer be used by the owner. In case the RC is not cancelled and the vehicle is scrapped, criminals can use it to give the vehicle a new identity, which can be used for fraudulent activities.
Moreover, if the RC is not cancelled and the vehicle is gone into scrap, criminals can also use the removed spare parts and sell them to earn money. The legal onus might fall on you as the RC stays active. Cancellation of RC would ensure you stay out of these legal obstacles.
Prevent Vehicle Theft
Vehicle thieves are known to forge the engine and chassis number; after that, they can use your bike for criminal purposes. It will cause serious trouble for you in the future. This is why you must cancel your RC. If you fail to cancel the RC, you will be legally and financially responsible for the damage caused to someone by the thieves later on with your bike.
How to Cancel Your RC?
There is a process laid out for cancelling your registration certificate. To cancel your RC, you must follow the following steps:
- Click the photos of your bike that is being scrapped.
- Get an affidavit that the bike is scrapped.
- Inform the RTO about scrapping your bike.
- Submit all the necessary documents that the RTO asks.
- The RTO will get a clearance certificate from your local police station.
- You will get a notification about your bike's RC being cancelled.
- The RTO will cancel your bike's RC.
- The RTO will issue you a non-utilisation certificate for your motorcycle.
There are two scenarios in which the vehicle owner needs to cancel the RC when the vehicle goes into scrapping. As discussed earlier, it is made mandatory by the Indian government to cancel the RC if the vehicle meets the criteria for total damage under the Motor Vehicles Act, 1988. But above that, there is another policy called the vehicle scrappage policy. This was announced in the Union Budget of 2021. According to this policy, the vehicles must undergo a fitness test every 20 years. The tenure for this test for commercial vehicles is 15 years.
If the vehicle is found to be unfit for the roads after taking such a test, it could go to scrapping and receive incentives from the government for this action. The main motive behind this law was to reduce pollution in India and improve the bike's fuel efficiency.
In case your vehicle is approved for scrappage, you can scrap your vehicle and cancel your RC and receive incentives from the government.
To Sum It Up
You should follow the guidelines given by the government and inform the RTO to cancel the RC for your vehicle. This will be easier to deal with, given that you already have an existing two-wheeler insurance policy. Lastly, it is necessary to remember for your bike insurance renewal because it will help file a claim in case of total damage or loss of your bike.
Read more - Importance of Bike Registration Certificate