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Vehicle Scrappage Policy

  • Author :
  • TATA AIG Team
  • Published on :
  • 29/12/2021

The Vehicle Scrappage Policy was announced by the Government of India in the Union Budget for the year 2021-22. As per the early estimates, the policy is likely to cover 51 lakhs of light motor vehicles above 20 years of age and another 34 lakhs LMVs above 15 years of age.

The main intention of having a Vehicle Scrappage Policy is to discard the vehicles which exceed 15 years of age. Most of the vehicles above 15 years of age are manufactured long back and have the highest contribution to pollution emissions. The engine health of these vehicles has deteriorated considerably and thus, the vehicles emit harmful fumes resulting in air pollution.

In addition to the pollution, the old vehicles could breakdown at any place resulting in traffic jams. The Vehicle Scrappage Policy mentions the guidelines to be followed to dispose the old vehicles above 15 years of age. Most of the insurance companies have already stopped giving four-wheeler insurance to vehicles over 15 years of age.

In this article, we will learn in detail about the vehicle scrapping policy and the process to be followed to transfer your 4-wheeler insurance from an old car to a new car.

Process of Vehicle Scrappage

  • Any vehicle above 20 years of age, if found unfit or registration certificate is not renewed, then the vehicle will be de-registered making way for the first step in Vehicle Scrappage policy.
  • Such vehicles which are de-registered are supposed to hand over the vehicles to registered vehicle Scrappage facility with certificates such as Registration Certificate, insurance for four-wheeler, PAN card and other necessary documents.
  • Scrapper will verify the details of the records of stolen data vehicles to check if the vehicle is a stolen vehicle or not. Then the scrapper will issue a Certificate of deposit to the customer which is mandatory to avail incentives given to the customers participating in the Vehicle Scrappage policy.
  • This certificate once used will be stamped “Cancelled” to prevent using it again and again.
  • The government will make a database of the vehicles that are scrapped every year.
  • The four-wheeler insurance for the scrapped vehicle should be cancelled by the customer as the vehicle is scrapped.

How is the Decision Taken to Scrap the Vehicle?

There are certain criteria laid down by the Government of India to be followed to scrap the vehicle as mentioned below:

  • The primary criteria to determine the vehicle fitness will be the emission tests, braking, safety equipment among many other tests which are mentioned in the Central Vehicle Rules, 1989.
  • Rules for fitness centres and scrapping centres to be applicable from October 1, 2021, while the government vehicles which are older than 15 years will follow the rules from April 1, 2022.
  • Fitness testing would be mandatory for all vehicles including commercial vehicles. For commercial vehicles, the process would be effective from April 1, 2023, and for other categories, it would be effective from June 1, 2024.
  • The fees for fitness certificates would be increased for vehicles aged 15 years and above, if such vehicles fail to get the fitness certificate, they will be de-registered. This increase in fees would be applicable to all classes of vehicles such as Commercial vehicles, Private cars etc.
  • A vehicle failing to get the fitness test or to renew the registration will be declared as an “End of Life Vehicle”.
  • The 4-wheeler insurance policy would also not be renewed for the vehicles failing to get the fitness certificate or renew their registration.
  • If you can get a fitness certificate and renewal of registration then you can compare car insurance for your car from Tata AIG.

Incentives to Customers in vehicle scrappage policy

There are certain incentives given to the customer who participate in the national scrapping policy which are mentioned below:

-Scrap Value: The scrapping centre would be 4%-6% of the ex-showroom price of the new vehicle to the customer. The scrap value can be utilised to purchase another new vehicle as per the choice of the customer.

  • Vehicle Manufacturers: The vehicle manufacturers are advised by the Government of India to provide a 5% discount on the purchase of a new vehicle against the scrapping certificate obtained from the scrapped vehicle.

-Road Tax Rebate: The state governments are advised to offer a road tax rebate of up to 25% for personal vehicles and 15% for commercial vehicles.

-Registration fees waived off: The registration fee would be waived off for the purchase of a new vehicle against the scrapping certificate.

-Insurance: Online car insurance policy can be purchased for your new vehicle by transferring the NCB from the previous year policy.

Transfer of NCB from Scrapped Vehicle to New Vehicle

The car insurance in India has the No claim bonus section which gives discount on the own damage premium to the customers who do not make any claim in the previous year policy. The no-claim bonus is given to the owner/driver of the vehicle in appreciation of the good driving behaviour and no claims made during the previous policy period.

The insurance for four-wheeler which is scrapped should be cancelled and a new insurance policy should be taken at the time of new vehicle purchase. The No claim bonus in a scrapped vehicle 4-wheeler insurance policy, if any, can be transferred to the new vehicle purchased in the name of same previous owner. The process of transferring the No claim bonus is made simple four-wheeler insurance in India by Tata AIG.

It is important to compare car insurance premiums from Tata AIG before deciding on the 4-wheeler insurance for your new vehicle in place of the scrapped vehicle. The NCB transfer letter should be obtained from the previous insurance company submitted to the new insurance company to carry forward the NCB from scrapped car to the new 4-wheeler insurance policy.

It is advisable to take the online car insurance policy for new car in place of the scrapped car as there would be easy options to carry forward the NCB from your previous year policy without much hassle.

To Sum Up

The national vehicle scrapping policy has been introduced to curtail the pollution generated by the old age vehicles which are above 15 years of age and the NCB in these policies can be carried forward to the new vehicle at the time of purchase. The scrapping of old vehicles will be carried in accordance with the Vehicle Scrappage Policy of 2021.

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