Q

How does scrapping a car affect insurance?

A

If you are in an accident and your insurance company scraps your car, they will include the value of your vehicle’s scrapped parts when determining how much you should be paid for your car.

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By

Rachael Brennan

Rachael Brennan

Property and Casualty Insurance Expert

Rachael Brennan is a senior insurance editor at Policygenius, specializing in auto insurance. She worked for 21st Century Insurance, BlueCross BlueShield Massachusetts, and HealthPass New York. She also spent two years working as a content expert for dozens of auto insurance websites through 360Quote LLC.

Published September 10, 2021|4 min read

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Being in an accident is an awful experience, and finding out that your car has been totaled (meaning it was so badly damaged it would cost more to repair it than replace it) can make it even worse. There are several things you should do after a car accident, and working with your insurance company to scrap your car can sometimes be one of them.

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But what does it mean to scrap a car? More importantly, how does scrapping your car affect your insurance?

Key Takeaways

  • A scrapped car is unrepairable and really only capable of being used for scrap metal

  • Claims for totaled vehicles include the value an insurance company will get from selling what is left of your car

  • You don’t need to cancel your insurance before you scrap a car

  • A salvaged vehicle has more value than a scrapped vehicle and will net you a bigger payout on a claim for a totaled car

What is a scrapped car?

A scrapped car is a car that is so badly damaged it is unrepairable and really only able to be used for scrap metal.

When your car is badly damaged in an accident, it will go through the following steps:

  1. Your car is taken to a repair shop after an accident to determine exactly how badly damaged it is and whether or not it can be repaired

  2. Your insurance company declares your car totaled and decides whether it should be salvaged (rebuilt and resold) or scrapped (sold for scrap metal) 

  3. They determine your car’s actual cash value (ACV)

  4. They arrange for your car to be hauled to a junkyard and get a check for the weight of the scrap metal they can salvage from your car

  5. They write you a check for your claim, minus any applicable deductible

If you are in an accident and your insurance company decides your car is unrepairable, they will include the value of your vehicle’s scrapped parts when determining how much you should be paid for your car.

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Scrap vs. salvage

A scrapped car is one that is damaged beyond repair. This means that it cannot be fixed to the point of drivability, even if you want to keep it for a teenage driver or sentimental value. Scrapped cars are only valuable for the weight of their materials (metal from the frame, rubber from the tires, etc.)

A salvaged vehicle is a damaged car that can be repaired. It likely will never hold its original value again, but it can be repaired to a point where it is a functional vehicle. From your insurance company’s point of view, a salvaged vehicle has more value than a scrapped vehicle and will net you a bigger payout on a claim for a totaled car.

Does scrapping a car change your totaled car insurance payout?

When your car is totaled in an accident, the check you get from the insurance company comes with the assumption that your car is now their property. Essentially, the insurance company is buying your totaled car from you. 

Claims for totaled vehicles include the value an insurance company will get from selling what is left of your car. If your car is scrapped, your insurance company will include the amount they get from the junkyard in your check. If, for some reason, you choose to keep your totaled car instead of surrendering it to your insurance company, your payout will be smaller because it won’t include the value of the scrap metal.

Do I need to cancel my insurance before I scrap a car?

No, you don’t need to cancel your insurance before you scrap a car. In fact, keeping your insurance policy active will allow you to add your new vehicle to the policy with minimal fuss and prevent you from having a gap in your insurance coverage. A gap in coverage can cause your insurance rates to go up, so keeping the policy in place is a good way to keep your insurance rates low. 

Beyond that, most states require you to carry insurance on registered vehicles, which means that you could run into trouble if you have the vehicle in your possession without an insurance policy, even if it isn’t drivable. There are some situations where you could cancel the insurance on a scrapped vehicle that is still on your property, but it certainly isn’t necessary (or even a good idea) to cancel a policy for a car that is still technically yours. Once the car is scrapped you should remove it from your policy.

Can I scrap an uninsured car?

Yes, any totaled vehicle can be scrapped. However, you will be in charge of finding a junkyard that will take your car and negotiating the value with them. If the car is insured, the insurance company will handle it on the back end.

In fact, most insurance companies have junkyards and scrap metal dealers that they work with regularly, which means they are already set up to move through the process of scrapping your car as quickly and easily as possible. Without that network, you can expect to spend some time making phone calls, getting your car towed, and otherwise handling all of the ins and outs of scrapping your vehicle on your own.

Is scrapping a car worth it?

For the vast majority of people, scrapping a car is absolutely worth it. A car that has been totaled beyond repair has no value to the average person and, in fact, is likely to be a burden. If you don’t have space to store it or any use for the broken parts, the odds are good you will have to pay to store it or keep it on your property, which means potentially cluttering up your yard and upsetting your neighbors. 

Some people, such as artists or car repair enthusiasts, may find value in keeping a scrapped vehicle, but those situations are few and far between. The average driver is better off taking the money for their scrapped car and putting toward purchasing a new car.

Frequently Asked Questions

Can I drive a totaled car?

If the car was salvaged, it can be repaired to a point of driveability and you can choose to keep the car. You will receive a smaller payout from the insurance company and you will likely be unable to insure it until it has a rebuilt title. In fact, some insurance companies will not offer comprehensive and collision coverage for salvage vehicles at all.

Can a totaled car be insured?

Depending on how badly it was damaged, a totaled car that has been salvaged could potentially be insured with comprehensive and collision coverage again. Many companies don’t offer the option, but some will insure a salvaged car with a rebuilt title. A car that has been scrapped will never be insurable again because it has been damaged beyond the point of useability.

What should I remove from my car before I scrap it?

You should remove any personal items from the car, including insurance paperwork and other documents. You should take out anything that you added to the car that wasn’t destroyed, like high end stereos or portable entertainment systems. You should also ask your insurance company if you need to remove the license plates or anything else from the car before they haul it away.