Does scrapping your car really affect your car insurance? It’s a common question, and one that doesn’t have a straightforward answer. Your car insurance premiums are calculated based on a number of factors, including your driving history, the type of car you drive, and the amount of coverage you need. So, if you’re involved in a serious accident and your car is totaled, your rates could go up. However, if you’re not at fault for the accident, your rates may not change. If you’re thinking about scrapping your car, it’s important to talk to your insurance agent to find out how it could affect your rates.
When you have a junk car laying around and decide it would be a good idea to scrap it (for the sake of the environment and for getting some extra cash), there are some measures that must be taken first. And one of these measures is to inform your insurance company about your decision – but will scrapping your car affect your car insurance?
What is Junk Car Scrapping?
Junk car scrapping is the process of cleaning toxic liquids out of an old car, and analyzing its parts to determine what can be recycled and what can be used to repair other products – or create new ones.
Many people earn some extra cash from scrapping their cars and, to do so, there are some important steps that should be taken.
What Should I Do If I Want to Scrap My Car?
If you wish to scrap your car, you have to collect some basic information about it. This information consists of knowing:
- The vehicle’s manufacturer
- The size and weight of the vehicle
- The mileage
- The model
- When it was fabricated
- How much did it cost
- How much did the price of scrap metal cost at the time the car was bought, and how much it costs nowadays
The ownership of the car also has to be transferred to the scrap car removal company, along with the keys – we at Scrap Car Removal Etobicoke can assist you with it.
However, another measure to be taken is to inform both Service Ontario and your car insurance company of your decision. But, many people wonder how it is to let their insurance company know that they decided to scrap their old car – are there any consequences? How is the insurance impacted?
Also Read: Tips For Selling Your Junk Car
Will My Car Insurance Be Affected If I Scrap My Junk Car?
An old junk car increases the liability of insurance companies because such cars are dangerous since they are not safe to drive in and can harm the environment. Because of this, if any accidents were to happen, these insurance companies would pay a high price for the damages – therefore, they charge car owners a high premium.
This premium cost will depend on the market value of the car – or the Insured Declared Value (IDV). This value can also decrease if new car prices decrease as well.
Old and unfit cars, upon being scrapped, contribute to an insurer’s ICR – Incurred Claim Ratio. This ratio is the value of settled claims and the value of premiums insurance companies have received. Once junk cars are scrapped, this ratio also decreases.
Do I Have to Cancel My Insurance Before Scrapping My Junk Car?
To keep it simple – yes. When canceling your car insurance for your old car before scrapping it, you are also saving yourself from making any recurring payments on the car. In fact, in some cases, you might even be able to get a refund.
You also must cancel your old car’s Registration Certificate so people do not misuse it for stolen vehicles, or vehicles bought for illegal purposes.
Scrap Car Removal Etobicoke Can Assist You
If you have any questions about the process of scrapping your car and how it works, you can reach out to us at 647-483-0521. We will be happy to assist you with the essential steps necessary to inform your insurance company about car scrapping and how it affects them.