Have car or bike insurance? You will not get total loss claim money until you take this step; IRDAI raises forgery alert

Vehicle Insurance Total Loss Claim: Cancellation of Certificate of Registration (RC) is a must for total loss claim, insurance regulator IRDAI has told insurers in a recent circular. Total loss claim can be made when the vehicle is destroyed or becomes permanently incapable of use.

The circular issued by Yegnapriya Bharath, Chief General Manager, IRDAI, says, "It has come to the notice of the authority that in case of total loss (TL) of the vehicle, salvage of the vehicle is being sold to scrap dealers without cancelling the certificate of registration (RC) of the vehicle" 

IRDAI said documents of such vehicles were being misused by fraudsters to give new identity to stolen vehicles by forging the engine number and chassis number of destroyed vehicles under the total loss (TL) claims. 

"It has been informed by the Law Enforcement Authorities that documents pertaining to such vehicles are being misused like giving new identity to the stolen vehicles by forging engine number and chassis number of destroyed vehicles under TL claims.

*IRDAI Circular

What law says

The circular mentioned Section 55 of Motor vehicle Act, 1988 which says: 

1. If a motor  vehicle has been destroyed or has been rendered permanently incapable of use, the owner shall, within fourteen days or as soon as may be, report the fact to the registering authority within whose jurisdiction he has the residence or place of business where the vehicle is normally kept, as the case may be, and shall forward to the authority the certificate of registration of the vehicle.

2. The registering authority shall, if it is the original registering authority, cancel the registration and the certificate of registration, or, if it is not, shall forward the report and the certificate of registration to the original registering authority and that authority shall cancel the registration.

In view of the law mentioned above, the IRDAI has advised all insurers to ensure cancellation of Certificate of Registration (RC) of the vehicle in case of total loss claim settlement.