What happens to your insurance when you scrap a car? August 21, 2020
Scrapping your car is actually a very simple process when the time comes to do it; you just need a bit of knowledge in advance to make sure it runs smoothly.
One of the most anxiety-inducing aspects of it, for many vehicle owners, is the insurance implications. Who’s liable for the car and when? What moment does the responsibility pass from you to the scrap company? What paperwork needs filling out? And when?
We answer all of those questions (and more) for you below. You can scroll down to find the answers to specific questions if you like, but if you’re new to the whole scrapping thing, you might want to get comfy and give it all a good read.
Do I need to cancel my insurance before I scrap the car?
The answer to this one depends. It is always advisable to contact your insurance company prior to going ahead and arranging for your car to be collected and scrapped, but there are two main scenarios to consider within this.
If the car is parked/stored on the road…
If you’re keeping your car on the road, even if it’s undrivable and has been immobile for some time, it is illegal not to have an active insurance policy in place. In this scenario, the car is your responsibility right up until the moment the scrap company comes and collects it – but as soon as they do drive away, the responsibility transfers to them.
The best course of action is to wait until the scrap company has come and taken the vehicle away before you actually cancel the policy.
If the car is stored away on your property…
If you’re keeping the car on your property, whether it’s drivable or not, there is no legal obligation for you to have insurance. This is the case no matter where exactly the vehicle is on your property: it might be in full view on the driveway, or it might be packed away in the garage; it makes no difference.
It doesn’t relate directly to insurance, but you should tell the DVLA that your vehicle is off the road – what’s known as a Statutory Off Road Notification (SORN) – which is a very quick and easy online process (you just have to input the 11-digit number from your car’s logbook and it becomes effective immediately).
This means you won’t have to pay vehicle tax while your car is off the road, and you’ll get a refund for any months you’ve paid in advance for.
Something to note, though: this uninsured scenario does mean that your vehicle would not be covered in the event of damage (accidental or criminal) or in the event of theft.
As such, you may want to consult your insurance provider before you go ahead and cancel the policy – the peace of mind alone might be worth it, not to mention you might have built up a no-claims bonus that’s worth keeping in play for when you come to renew.
I already have a new vehicle to replace the one being scrapped…
Understandably, most people want to avoid insuring two vehicles at once if they can, for cost reasons and to avoid hassle and paperwork.
If you manage to time it right – receiving your new car on the day you scrap its predecessor – all you’ll need to do is inform your insurer on the day, and obviously give them the details of your new car so that they can amend the policy.
New car, new insurer?
Many people use the change in vehicle as an opportunity to switch insurance providers, either to get a better deal or to access better customer service, but that’s not always possible.
Some insurers will provide you with a partial refund (e.g. if you’ve paid for the year upfront and you have a few months left on the policy), whereas others will hold you to the terms of your contract, meaning you’ll have to stay with them until the existing policy runs out. After that, though, you’re free to seek a cheaper or more advantageous policy elsewhere.
In any case, it’s worth ringing up your insurer and seeing what they can do – remember: it’s the customer-service department’s job to keep you happy and retain your custom, so they may offer to match the quotes you’ve collected from other insurers.
When do I need to insure my new car?
You might already have the replacement car in your possession, but you only need to insure it once it’s on the road, or if it’s parked up on the road.
If the new vehicle is stored on your property and you’re not yet driving it, you have no legal obligation to insure it.
Will I be in trouble if I delay notifying my insurer of the scrapping?
It’s best to keep your insurer notified throughout the process, but you don’t technically have to tell them immediately – it will just mean that you continue to pay insurance for a vehicle that you no longer drive (and which no longer exists).
The party you need to tell immediately, however, is the DVLA. If you don’t, you could face a £1,000 fine. Speaking of which…
What paperwork do I need to take care of?
When you scrap your car, you first need to make sure you do it through an ATF – ‘Authorised Treatment Facility’ – such as us. (If the vehicle is already off the road, make sure you’ve completed the SORN process that we outlined earlier.)
You need to hand your vehicle logbook (AKA your ‘V5C’) over to your chosen ATF when they come to collect it (or if you drive it to them, although that is less common and is unnecessary hassle for you).
Important: make sure you keep the V5C’s yellow section about selling/transferring/part-exchanging it. Again, though, if you’re using an ATF, they’ll make sure you don’t leave without it.
Scrap your car properly and easily with Scrap Car Kings
We are an ATF operating across London, Essex and Kent. Get a quick online quote from us to see the most competitive price for your vehicle, and if you’re happy with it, we’ll pay you upfront and then come to collect it from you.