Vehicles that are older and no longer roadworthy are significant contributors to the emission of greenhouse gasses. These vehicles can also be dangerous for their occupants. To reduce pollution and improve road safety, the government has launched the Vehicle Scrappage Policy.
Once a vehicle’s registration expires and it is determined to no longer be fit to keep on the streets, it will be scrapped in an environmentally friendly manner. This program is to help eliminate older, dangerous vehicles from the roads while also lowering pollution. However, you can have a cross check from reliable scrap car removal company to find out if your car needed to scrap or not.
Do you have insurance on your vehicle? If so, how does scrapping affect your car insurance? Find it out below.
How Does Scrapping a Car Impact Insurance?
Personal cars older than 20 years and commercial cars more aged than 15 years will be automatically deregistered. They then have to pass an inspection, and those that pass this test can be re-registered, and those that fail will then need to be scrapped.
So, yes scrapping affect your car insurance in the following ways:
- Car makers will gain access to materials like rubber, plastic, steel, aluminum, and copper from scrapping these cars. With this access to lower-cost materials for manufacturing, auto manufacturers can, in turn, reduce the cost of vehicles.
- With a decrease in the price of new cars, insurance costs may be lower because the approximate market value of the vehicle determines the insurance premium.
- Despite regulations on third-party premiums for car insurance, these third-party claims are higher than own damage claims. Older and unfit vehicles are often more dangerous on the roads and significantly contribute to higher third-party insurance claims.
- With this new plan for scrapping, third-party claims are expected to reduce overall since these unfit vehicles will be being scrapped.
- Older cars and unfit to be on the roads can cost the insurance company quite a bit more money in claims over time. When these cars are removed from the streets, insurance companies may find that they spend less money per year on claims.
- Scrapping unfit cars can mean insurance companies pay far less overall.
Is There a Need to Cancel My Insurance Before I Scrap My Car?
Before you tell your insurance company about your policy being canceled, you’ll have to get your car’s Registration Certificate revoked at your applicable Regional Transport Office. Once that’s completed, you’ll need to inform ACKO about your car insurance policy being canceled. If your policy is refunded, this will be calculated on a pro-rated basis. If you’ve raised a claim in the current policy year, however, you may not be able to cancel this policy.
Implications of Not Canceling Your Car Insurance After Scrapping the Car
You have to cancel your car’s certificate if it is scrapped. Otherwise, you can run into serious issues. You have to cancel your car’s certificate if it is scrapped. Otherwise, you can run into serious issues. So, you must know when is the best time to scrap your car.
There are some reasons why you may have to cancel your car insurance:
Misuse of Car Documents
When a vehicle is scrapped, the Registration Certificate must be canceled immediately. Otherwise, fraudulent individuals could misuse the vehicle’s documents. These could provide a vehicle identity for illegal activity or as a front for stolen cars.
Prevent Vehicle Theft
If you don’t immediately cancel the certificate, criminals could use the documents of your scrapped car for a stolen car. Canceling the RC helps avoid vehicle theft.
Car Insurance Refund for a Scrapped Car
It’s vital to cancel once you’ve scrapped the vehicle. Once the Registration Certificate is canceled, then you can proceed with canceling your insurance policy. Refunds will be pro-rated, and you may not receive refunds for any claims. Make sure that you entirely cancel the procedure whether you’ve filed a claim or not. Deactivating the vehicle insurance policy is crucial if the vehicle’s registration has been canceled.
Frequently Asked Questions (FAQ)
Here are some common questions about this policy and the impact that it can have on vehicle insurance:
Is It Worth Scrapping a Car?
This policy was designed to limit high levels of greenhouse gasses while reducing the number of accidents caused by older vehicles. Unfit cars must pass a fitness test to remain on public roads. If your car is older, you may need to scrap it if it is found unfit to drive. Scrapping of these incapable cars is mandatory per this policy.
What Happens to the Road Tax I’ve Paid When I Scrap My Car?
If you cancel the RC of your car within fifteen years of using it, you can get a refund for the road tax you’ve paid.
Do I Need to Inform My Insurance Company if I Scrap My Car?
Yes. You will need to let them know that you’ve scrapped the car. They will cancel the policy since the vehicle will no longer be registered for use on public roads.
Do I Need to Cancel the RC After I Scrap the Vehicle?
Yes. Otherwise, you risk serious repercussions.
What Are the Main Benefits of the Vehicle Scrappage Policy?
This policy aims to set up a system for scrapping unfit cars throughout the country while mitigating the rising pollution levels caused by unfit vehicles on the roads.
Can I Buy a 20-Year-Old Car?
Yes. You can purchase older vehicles if they are still roadworthy. However, Vehicles older than 20 years and commercial vehicles more than 15 years old will be deregistered, and they will be required to pass an inspection to run on public roads. If they pass this inspection, they can then run on public roads.