Auto insurance

Does scrapping your vehicle affect your car insurance?

Scrapping your vehicle is a reason to cancel your insurance, but not if it has a chance of getting back on the road.

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Maybe it was an accident, or you left it to rust, but you have to scrap your old car. Before you say goodbye forever, there are a few things to consider, especially when it comes to your car insurance.

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Calling your insurer is the first thing to do if your car is no longer roadworthy. If you do not replace your vehicle with a new one, you will have to cancel your insurance. This means that you are no longer responsible for the car. If you are driving another vehicle, you must inform your insurance company and provide them with all the relevant details (make and model, license plate number, etc.)

How do you know if your car is deregistered? In the eyes of an insurance company, it will write off a vehicle “if the cost of repairing the vehicle exceeds the value of the vehicle,” says Anne Marie Thomas, director of consumer and industry relations at the Insurance Bureau of Canada.

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Will a gap in coverage affect my car insurance rate?

If you decide to wait before buying a new car, or if you decide to give up buying one altogether, it will not affect your car insurance rate on the new vehicle. Even if a year passes, you will pay the new rate, with inflation, but not a higher premium following a break in coverage.

A coverage gap only affects your rate if it’s something like non-payment of premium or impaired driving,” says Thomas. In fact, it is a regulations imposed by the provincial governmentShe adds.

Donate or store a scrapped car

How you dispose of your car will not affect your insurance. Once you have handed over the property to the scrapyard, the car is no longer your responsibility. However, if you don’t sign the car and they rebuild the car with old parts – often called salvage title vehicle – it could potentially still be in your name. As the owner, you could be at fault in a collision.

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If you decide to store your car in front of your house for a period of time, you should keep it insured. “You don’t move it, but of course it has to go up and down the road somehow,” says Thomas. “You’re not going to tow it into your driveway, you’re probably going to drive it.” And, even if the car is stored in your yard, if the car is moved there without towing, you need insurance.

If you decide to donate your car to charity, be sure to get a tax receipt. In some provinces (British Columbia and Quebec), you can get a rebate for donating your scrapped gasoline car and buying an electric vehicle (EV). For example, with the Scrap-It program in British Columbia, drivers can get up to $3,000 in rebates. In Ontario, Plug in and drivea non-profit organization committed to increasing the use of electric vehicles, is offering up to $2,000 in incentives if your car is accepted into the program.

Scrapping your vehicle if it’s a write-off is reason to void your insurance, but not if it has a chance of being driven again, even temporarily. is a free, independent rate comparison website that allows Canadians to compare rates for various financial products, such as home and auto insurance, mortgages and credit cards.