How Does Scrapping My Car Affect Insurance?

Scrapping your car means your insurance must be cancelled. You can’t make a claim on a vehicle that no longer exists, and continuing to pay premiums would simply waste money.

Most providers will refund the unused portion of your premium once you confirm the car’s been scrapped and submit any required documentation. At that point, you can either start a new policy for your next vehicle or switch to a different type of cover.

The general steps for doing so are: contacting your insurer, confirming the Certificate of Destruction (CoD), and formally ending your policy. But there are technicalities to this that you can’t miss.

To answer your questions, I’ve put together this quick guide on what happens to your insurance when you decide to scrap your car.

Should I cancel insurance after scrapping my car?

Yes. Once your car is scrapped, it’s no longer legally (or practically) insurable, so you must cancel your policy. Keeping it active only wastes money and could potentially complicate your records with your insurer.

Importance of cancelling your insurance

Cancelling your insurance after scrapping your car is essential because the vehicle no longer exists as an insurable asset. Once an Authorised Treatment Facility (ATF) issues a Certificate of Destruction, the insurer’s coverage no longer applies. Informing your provider keeps the records accurate and keeps you from getting billed for unnecessary cover.

If you don’t cancel your policy, you risk:

• Wasting money on premiums for a vehicle you no longer own
• Losing your refund potential if you paid the annual premium upfront
• Invalid records with your insurer and the Motor Insurance Database (MID)
• Potential renewal charges for a policy that should have ended
• Complications when setting up a new policy for your next car
• Possible disputes if a claim or refund is later questioned

Consequences of not cancelling your insurance

Failing to cancel your insurance after scrapping your car can lead to both financial loss and long-term complications.

If you paid your annual premium in full, you’re usually entitled to a pro-rata refund for the unused months once you cancel. Not doing so means forfeiting that refund and losing money you’re owed.
If you pay monthly through a credit agreement, simply cancelling your direct debit doesn’t end the policy. The insurer can still pursue you for outstanding payments and fees, which would lead to debt collection and possibly damage your credit score.

There’s also the risk that your insurer discovers the vehicle’s been scrapped and cancels the policy themselves. If that happens, the cancellation goes on your record and, for life, you’ll have to declare it whenever you apply for insurance in the future. Insurers view this as a red flag, meaning it’ll increase your premiums and make approval harder.

How to properly cancel your insurance policy

Cancelling your insurance after scrapping your car is simple, but it’s important to do it correctly to avoid charges or confusion later. Once you have your Certificate of Destruction from the ATF, follow these five steps to close your policy properly:

• Contact your insurer. Call or email your insurance provider to let them know your car has been scrapped and you wish to cancel your policy. Some insurers have a customer portal where you can do this online instead.
• Provide required documentation. Send a copy of the Certificate of Destruction or receipt you received from the ATF as proof that the car is no longer in use and that they process the cancellation correctly.
• Confirm cancellation date. Agree on the official date your policy will end to make certain you’re not billed beyond that point. This is typically at the end of the current billing period.
• Request written confirmation. Get everything in writing so that you have a case if there’s a billing issue later on. Ask for an email or letter confirming the cancellation and the exact refund owed.
• Follow up if necessary. If you don’t receive confirmation or a refund within a few weeks or if you notice continued charges, reach back out to your insurer to make sure the process is complete on their end.

What if you’re collecting my car from private property?

If your car is being collected from private property, such as your driveway or a private garage, the process for cancelling insurance is the same. But the car could still be damaged during loading or collection and without insurance, you’d have no protection.

During this process, both you and the collection service have responsibilities:

• You must make sure the vehicle is accessible, free from personal belongings and ready for collection.
• The scrapyard or ATF must be licensed and provide proof of collection and destruction once the vehicle is in their care.

Your insurance policy doesn’t usually need to be adjusted for this stage, but keep it active until the ATF confirms ownership transfer. Once you receive your Certificate of Destruction, you can safely cancel the policy knowing your legal and financial obligations are complete.

What if my car is already SORN and off the road?

If your car is declared SORN (Statutory Off Road Notification), you don’t legally need to keep standard insurance since it’s no longer being driven or parked on public roads. However, I’d always recommend maintaining some level of cover.

You can take out a specialist “laid-up” insurance policy, which offers reduced premiums for vehicles that are off the road. This type of policy covers risks like fire, theft and accidental damage while your car is stored at home or in a garage.

If your SORN car is due to be scrapped, here’s what to do:

• Contact your insurer to explain the situation and confirm when you’ll scrap the vehicle.
• Keep insurance active until someone collects it.
• Once you have the Certificate of Destruction, cancel your policy and request any refund due.

Even if you plan to scrap the car soon, keeping insurance in place until it’s collected protects you financially and guarantees there’s no gap in your coverage history.

Do I need to keep the car insured while it’s being transported?

Whether you need to keep the car insured while it’s being transported comes down to one important factor: who’s transporting the vehicle. If it’s you, then yes. If it’s an ATF or collection service like ours, then no.

Insurance requirements during transport

If your car is being collected by a licensed scrap dealer using a recovery truck, you generally don’t have to keep your own insurance active for transport. The collection company will have motor trade road risks insurance, which covers the vehicle while it’s being moved to an ATF.

However, maybe it goes without saying, but if you plan to drive or transport the car yourself, it needs to be insured until it reaches the scrapyard.

Responsibility for insurance during transport

Responsibility depends on who’s moving the vehicle. The scrapyard or transport company is responsible for insurance once the car is in their care, but you remain responsible up to that point.

Always confirm the company’s coverage before collection. They should be able to give you a copy of their insurance details or ATF licence number on request.

Risks of transporting an uninsured car

Driving or transporting an uninsured car yourself is illegal and risky. If you’re caught driving without insurance, you’ll face up to a £300 fine, 6 penalty points on your licence and additional fines of up to £5,000 if the case goes to court.

Beyond that, any damage caused to the vehicle or third parties wouldn’t be covered, leaving you personally liable for the costs.

Will I get an insurance refund if I scrap my car?

That depends on your policy details. Most insurers will offer a pro-rata refund for any unused portion of your premium once you cancel your policy, but the exact amount varies based on your terms and the type of cover you had.

• Third-party only refunds are straightforward once you cancel.
• Third-party, fire and theft insurers sometimes deduct more if you’ve made partial claims.
• Comprehensive means higher premiums, which means larger refunds if you cancel early, but also higher admin fees.
• Multi-car policies are tied together, so cancelling one vehicle might change the premium for the others rather than trigger a direct refund.

Beyond that, most insurers deduct a fixed fee before issuing your refund. And ongoing or recent claims will reduce or negate your refund eligibility.

If you want to claim your car insurance refund, here are the steps to follow:

1. Contact your insurer to inform them your car has been scrapped.
2. Show them your Certificate of Destruction as proof.
3. Request a refund confirmation with the amount and expected payment date.
4. Keep a written record of all communication for your files.

Refunds almost always arrive within 7 to 14 working days, though some insurers may take longer to process the payment. If nothing arrives after two weeks, contact your insurer’s customer service team to follow up.

Note: Reach out to your insurer for a definite answer based on your specific circumstances and policy.

Things to consider before selecting a scrapyard

Scrapping your car involves more than just getting rid of it. You’re legally responsible for where and how it’s scrapped. Choosing the right scrapyard guarantees you stay compliant, avoid scams and protect the environment.

Choosing a reputable scrapyard

Selecting a trustworthy scrapyard is the most important step in the scrapping process.

Always choose an Authorised Treatment Facility (ATF). These are officially licensed by the Environment Agency to handle, dismantle and recycle vehicles safely. Only ATFs can issue the Certificate of Destruction (CoD) you’ll need to prove the car has been disposed of legally.

You can research the scrapyard’s reputation through online reviews and customer feedback. And you can check the Environment Agency’s public register to verify the yard is, in fact, an ATF.

Note: There are different public registers for Wales, Scotland and Northern Ireland.

Avoiding scams when scrapping your car

While most UK scrapyards operate legally, there are several scrap car scams you need to be aware of:

• Unlicensed buyers posing as scrapyards, promising unusually high payouts. 
• No Certificate of Destruction, meaning your car might not actually be scrapped. 
• Unexpected collection fees upon pickup after you were already quoted a high sale price.
• Payment fraud, where the buyer promises a bank transfers that never arrives.
• Identity or logbook fraud, where someone uses the info to sell or clone your car illegally.

If you get a suspiciously high payout offer or someone wants to pay you in cash (illegal under the Scrap Metal Dealers Act 2013), those are the dead giveaways you’re getting scammed. If you can’t find them in the ATF register, that confirms it.

Legal obligations when scrapping a car

To actually scrap your car, you’ll need your V5C logbook. When you hand the car over, they’ll help you complete the yellow “Sell, transfer or part-exchange” section (V5C/3). And once the vehicle is dismantled, the ATF will issue a Certificate of Destruction (CoD), which you’ll keep for your records.

You’re required to inform the DVLA when your car has been scrapped. You can do this online in about 2 minutes, but some prefer to handle it by post by mailing the completed V5C/3 slip.

When you scrap your car through us, we’ll handle all the DVLA paperwork for you, but it’s still on you to make sure it’s confirmed on their end. If you don’t tell the DVLA, it’ll lead to a £1,000 fine and continued liability for a car you no longer own.

Environmental responsibilities of scrapyards

The reason scrapyards need an ATF licence is that they’re required to follow strict environmental rules when dismantling cars. Those rules include:

• Safely removing and storing hazardous fluids such as oil, fuel, and coolant
• Disposing of batteries, tyres, and airbags without harming the environment
• Preventing leaks and contamination through proper waste storage systems
• Recycling or reusing as many components as possible before crushing the shell

ATFs also recycle or resell usable parts and metals with the aim of reusing at least 95% of each vehicle. Choosing a scrapyard that meets these standards ensures your car is scrapped legally and sustainably.

Oh yeah, and it’s something we guarantee when you scrap your car through us.