Rules on Sale of Motor Vehicles After Total Loss Claim

The circular prescribes procedures to check unscrupulous practices that legitimize the registration of carnapped or illegally obtained vehicles.
The procedures are triggered by the payment of a total loss claim for loss or damage to a motor vehicle.
The reporting requirements are designed to ensure that motor vehicles involved in total loss settlements are traceably reported to the Insurance Commission and processed with the LTO when applicable.

A total loss claim paid by an insurance company for loss or damage to a motor vehicle triggers a mandatory reporting obligation.
The sale of a vehicle acquired by an insurance company after payment of a total loss triggers a mandatory subsequent report.
The status of the vehicle as totally wrecked or junk triggers a mandatory registration cancellation process with the LTO.
The sale of only parts (particularly the motor or chassis) triggers rules that prohibit transferring the vehicle’s registration certificate.

Whenever a total loss claim is paid, the insurance company must submit a report using the form titled “Description of Motor Vehicle Paid for Total Loss” to the Insurance Commission.
The submission must be made within seven (7) days from the date of payment of the total loss claim.
The duty applies without exception whenever a total loss claim is paid for loss or damage to a motor vehicle.

If the vehicle acquired after total loss payment is sold as a whole or only its parts, together with the vehicle’s registration certificate, the insurance company must submit a report using the form titled “Description of Motor Vehicle Paid for as Total Loss and Subsequently Sold (whole unit or parts)”.
The report must be submitted to the Insurance Commission within seven (7) days from the date of the sale.

If the motor vehicle is no longer serviceable, totally wrecked, or junk, the insurance company must submit the Registration Certificate of the vehicle to the LTO for cancellation.
After the LTO cancels the Registration Certificate, the insurance company must submit the report titled “Description of Motor Vehicle Paid for as Total Loss and Subsequently Sold (whole unit or parts)” to the Insurance Commission.
The report to the Insurance Commission must be filed within seven (7) days after the date of cancellation of the Registration Certificate.

If only some parts—particularly the motor or chassis—are sold, the insurance company must not transfer the Registration Certificate of the vehicle.
Instead, the insurance company must surrender the Registration Certificate to the LTO for cancellation when only parts are sold.

Vehicles acquired from January 1999 up to April 2000 through payment of total loss claims must be reported to the Insurance Commission no later than 30 May 2000.
The reporting for the earlier period must use the applicable forms titled “Description of Motor Vehicle Paid for Total Loss” and/or “Description of Motor Vehicle Paid for as Total Loss and Subsequently Sold (whole unit or parts)” based on the applicable situation.
For subsequent acquisitions, reporting must be made within the 7-day period prescribed by the circular, starting from the applicable triggering date (payment date, sale date, or LTO cancellation date).

All concerned are directed to be guided accordingly by these reporting and cancellation procedures.