Does Scrapping Your Car Impacts Insurance Policy?

Old vehicles with unfortunate motor proficiency lead to air contamination. With an aim to seclude such vehicles, the Government of India had as of late introduced another vehicle scrappage strategy that will scrap old vehicles who are neglecting to satisfy the wellness guidelines. In the event that you have an old vehicle, you might be stressed over it getting rejected under this new arrangement? Or on the other hand whether rejecting your vehicle will influence your engine insurance contract? Peruse on to find the answer.


What is a Scrapped Car?

A rejected vehicle is a gigantically harmed vehicle, which can’t be fixed. A rejected vehicle is just esteemed for the heaviness of its materials like the edges, elastic from their tires, etc.

The new vehicle scrappage strategy has set down common principles on how old vehicles will be rejected or deserted. Otherwise called the Voluntary Vehicle-Fleet Modernisation Program, old vehicles should go through a required similarity/wellness test. The individuals who finish this assessment can be re-enrolled and the people who fall flat need to go through the course of scrapping.

As per the ongoing engine regulations, an individual vehicle has an existence of 20 years, and a business one has a life expectancy of 15 years. Under the new approach, a 15-year old vehicle will currently require a legitimate wellness testament to restore the registration authentication for another five years.

The vehicle scrappage strategy will help with progressively eliminating old, pointless, and ill suited vehicles. The strategy will become effective following the registration time of the vehicle is over.


Does Scrapping Your Car Impact Your Insurance Policy?

Yes, rejecting a vehicle will affect the vehicle insurance contract. An old and unsuitable vehicle contributes to ecological debasement as well as hazardous to drive. Therefore, it builds the risk of the engine insurance agency and they charge a higher expense to vehicle proprietors. However, when assuming that your vehicle is rejected, you never again need to pay a high charge for your vehicle insurance contract. You can utilize a vehicle insurance mini-computer to check the assessed installment for reestablishing your old car.

Besides, an old and unsuitable vehicle likewise prompts a higher Incurred Claim Ratio of the guarantor. An ICR is a proportion of the complete worth of cases settled versus the all out charges acquired in the year. A few vehicle proprietors check the ICR of an engine insurance agency while purchasing the arrangement and go for the one with a high ICR. However, the ICR diminishes with a rejected vehicle. In this way, it will assist you with pursuing a superior choice while purchasing your vehicle protection policy.


Moreover, vehicle producers approach recyclable materials from the scrappage of ill suited vehicles. By utilizing these materials, they can bring down the assembling cost of the vehicle. With the diminished costs of new vehicles, their insurance costs will likewise lessen as the Insured Declared Value (IDV) assists with deciding the installment. On the off chance that you wish to know the IDV of your vehicle, you can do as such with the assistance of an IDV calculator.

Effects of Scrapping on the Claim Amount of Your Totalled Car

A totalled vehicle alludes to a four-wheeler whose maintenance costs is more than the market worth of the vehicle. Whenever your vehicle is totalled in a mishap, the engine insurance agency will propose to purchase the vehicle from you. Assuming your vehicle is rejected, the insurance agency will pay you the worth of the vehicle alongside the sum that they got from the junkyard.

But when you decide to keep your totalled vehicle as opposed to rejecting it, you will get a lesser sum since it wo exclude the worth of the garbage metal. Henceforth, rejecting your totalled vehicle can assist you with getting a higher case sum from your protection company.

Let us figure out this idea with a model

Mr. Y’s vehicle was harmed antagonistically in an occurrence and the expense of fixing the vehicle is more than its IDV. For this situation, the back up plan will pay full IDV as a case add up to Mr. Y while purchasing the totalled vehicle. Be that as it may, if Mr. Y consents to get his vehicle rejected, he will get the IDV in addition to the piece worth of the vehicle from the protection company.

Should You Cancel Your Insurance Policy Before Scraping Your Car?


As per the Indian engine regulations, it is obligatory to drop the Registration Certificate (RC) of your vehicle prior to rejecting it. After your vehicle is rejected, you ought to likewise drop your vehicle insurance contract. It assists with forestalling the abuse of your vehicle reports and robbery. The strategy premium will be discounted on a supportive of rata premise. Notwithstanding, you can’t drop the strategy in the event that you had brought a case up in the ongoing approach year. 

According to Section 55 of the Motor Vehicles Act, 1988, the vehicle proprietor is answerable for dropping the RC in instances of complete harm. It assists with monitoring the vehicles that are at this point not being used. The RC is of a vehicle doesn’t change with the responsibility for vehicle. Henceforth, dropping the RC implies the vehicle is scrap and unusable.


RTO Guidelines for Selling of Scrap Cars in India

In India, vehicle rejecting is an approved movement since old vehicles have been altogether contributing to ecological debasement. The Regional Transport Offices (RTOs) have shut the re-enrolling window for old vehicles and are doing their wellness test according to the new vehicle rejecting strategy. Assuming your vehicle is pronounced ill suited for use, do make sure to illuminate your engine insurance agency prior to getting it scrapped.

However, vehicle proprietors can likewise sell or transfer their vehicles to an adjoining state before the Registration Certificate (RC) lapses. After the transfer, they can re-register the vehicle at the new RTO. The re-registration subtleties of the vehicle must be refreshed and kept up with in the old RTO as well.



Scrappage of unsuitable and old vehicles is obligatory in India. It isn’t simply more advantageous to scrap an unsuitable vehicle yet in addition more secure than utilizing it out and about. You can likewise stay away from all intricacies engaged with the vehicle’s transfer to another RTO. So get your vehicle tried for wellness and afterward, rejected whenever proclaimed unsuitable for use.