No one likes to get rid of their car by disposing of it, but there could occur some circumstances that can force a person to write off or scrap their vehicle. Either the car was involved in an accident and cannot be salvaged, the cost of repairs is more than the actual value of the car, or the car cannot be repaired at all.
A few important things to consider while scrapping your car are the legal process involved in writing off and what happens to your insurance when you scrap your car?
The legal Process – Informing the Authorities
Before contacting the insurance company and handing off the car to the scrappage, you have to inform the DVLA, about taking your car off the road, as per laws in the UK. Then while handing over your car to the scrapyard, submit the vehicle’s logbook (V5C) but keep the yellow page (V5C/3) to yourself. Failing to do so can create legal hurdles and you could be fined £1000.
The Insurance Assessment, Payout, and Ambiguities
Assessment of Damage by the Insurance provider
Once you’ve informed your insurance company about the incident, they’d assign a representative to analyze the damage done to the car, and assign a write-off category to your car. This plays an important role in the further process, such as payouts and termination of the policy.
Insurance Write-off Categories (by DVLA, UK)
Category A: Cannot be repaired and has to be crushed.
Category B: Cannot be repaired and has to be crushed, but some parts could be salvaged.
Category C: Can be repaired, but the work would cost more than its value. The vehicle can be used again if it’s repaired to a roadworthy condition.
Category D: Repair work would cost less than the vehicle’s worth, but other costs (transportation) would make it uneconomical. Can be used again if repaired to a roadworthy condition.
Category N: Can be repaired following non-structural damage and used again if repaired to a roadworthy condition.
Category S: Can be repaired following structural damage and used again if repaired to a roadworthy condition.
The payout and premium are completely dependent on which category your car falls in.
Effect of Car Insurance package on Payout when Scrapping a Car
| Insurance package | Payout | |
| 1 | Fully Comprehensive Insurance | The insurer would pay the car’s current market value. |
| 2 | Third-Party, Fire, and Theft Insurance | The insurer would pay only if the car was damaged due to fire, or got stolen. |
| 3 | Third-party only | The owner won’t be paid if he was at fault, and in case the other driver was at fault, their company would give the payout. |
What Happens to your Insurance when you Scrap your Car?
· These are tricky and ambiguous situations. When you claim on your insurance after scrapping your car, you’d still be liable to pay the monthly insurance payments till the policy ends, despite writing off your car.
· If you paid the premium upfront for the whole year, you won’t be able to claim back the money for the remainder of the year, even though you’re technically insured to drive a car that is no longer on the road.
Would you get a Tax Refund?
If you’ve already paid the tax on the vehicle and insurance package, you’d be eligible for a tax refund for the remaining months, as per UK laws.
Pro Tip
In UK, some insurance companies even allow you to switch the insurance package from one vehicle to another, in case your first car gets damaged. It would be ideal to transfer the insurance coverage to your next car. You’d definitely have to pay a premium upfront for this.
What Company Do You Recommend for Car Scrapping?
We recommend a company called Clayton Carz, they offer scrap car collection services across London, Essex and some areas of Hertfordshire.
