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How does the cancellation of your insurance policy affect your car?

How does the cancellation of your insurance policy affect your car?

The Government of India has recently introduced a new vehicle disposal policy that will eliminate old cars that do not meet fitness standards. If you have an old car and are worried about getting cancelled under this new policy or its impact on your car insurance policy? Read this article to find the answer.

The discarded car is a badly damaged car that becomes irreformable. It is only evaluated for the weight of its materials such as rubber, glass, iron, and so on. The government's car cancellation policy has issued some guidelines on how to cancel or abandon old cars. Under this programme, older cars will have to undergo a mandatory fitness test, people passing the test can be re-registered and others will go through the scrapping process. 

Under the new government's policy, the 15-year-old must obtain a valid fitness certificate to renew the registration certificate for another five years. The vehicle cancellation policy will provide assistance in stopping old, useless and invalid vehicles. It comes into effect shortly after the end of the registration period.

Does car cancellation affect the insurance policy?

Car cancellation certainly brings an impact on car insurance policies. An old and unfit car is always dangerous to drive which increases the responsibility of car insurance providers who charge higher premiums. But, after the car gets cancelled, you won't have to pay your car premium. You can take advantage of the car premium calculator to find an estimated premium to renovate your old car.

In the case of a total car, which refers to cars whose repair costs are more than their market, the car insurance company may make an offer to buy the car from you. However, if your car is cancelled, the insurance company will pay you for the car in addition to the amount they receive from the scrap yard. But, if you choose to keep your car total instead of getting it cancelled, you will get a lower amount because it will not include the value of the unwanted metal. Therefore, cancelling your total car can get you a higher claim than your insurance company.

Do you have to cancel your insurance policy before canceling your car?

According to Indian car laws, it is mandatory for everyone to get their car registration certificate (RC) cancelled before getting cancelled. The owner of the car is responsible for cancelling RC in case of total damage. It helps track vehicles that are no longer in use. RC of the car does not change with the ownership of the car, therefore, the cancellation of RC refers to scrap and unusable form of the car.

After canceling your car, you should also cancel your car insurance plan because it helps avoid stealing and abusing your car documents. Your car insurance policy premium will be refunded on a pro rata basis. However, repealing the policy is not possible if you have filed a claim in that policy year.


The abolition of old and unfit cars has become a mandatory mandate in India. It is useful to get rid of an unfit car from an environmental point of view, but also safer to avoid driving on the road. It also affects the policy in different ways that you can identify in the above article. We hope this will help you deal with your policy if your car is cancelled.

Read also:

procedure to file a claim for future car insurance general

Steps to renew future public car insurance online

Disclaimer: This article is published in the public interest and is intended for public information purposes only. Readers are advised not to rely on the contents of the article as crucial in nature, and further research or expert consultation should be conducted in this regard.