Vehicle total loss claims: Cancellation of registration a must, says IRDAI

Those who wish to stake total loss claim in vehicle insurance will now have to obtain a certificate of cancellation of registration. Total loss claims are made if a motor vehicle is destroyed or rendered permanently incapable of use.

“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,” said Yegnapriya Bharathi, Chief General Manager, IRDAI, in a circular.

Stolen vehicles

This provided a safe channel to vehicle-lifters who would give a new identity to stolen vehicles by forging the engine and chassis numbers of the destroyed vehicles under TL claims.

However, as per Section 55 of Motor Vehicle Act 1988, if a motor vehicle has been destroyed or has been rendered permanently incapable of use, the owner should, within 14 days or as soon as may be, report the fact to the registering authority, within whose jurisdiction or place of business where the vehicle is normally kept, and forward to the authority the RC of the vehicle.

In line with the provisions of the Motor Vehicle Act and to prevent misuse of total loss accident vehicle documents over stolen vehicles, the insurance regulator has advised insurers to ensure cancellation of certificate of registration of the vehicle in case of total loss claim settlement.

“Selling stolen vehicles with destroyed TL claims data also shows a criminal collaboration between some black sheep in the general insurance staff who sell TL claims data for a price. This is a big mafia and the IRDAI’s direction will help preven this,” said a top executive of a private general insurance company. Less than 8 per cent of stolen vehicles are recovered. A big chunk of the rest are either sold in parts or are being run with existing/destroyed engine/chassis numbers.

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