Anthony Perry, 43, torched his VW Golf outside his home in Llanbradach, Caerphilly county, in February, putting neighbouring vehicles and homes at risk.
He admitted arson being reckless as to whether life is endangered, fraud and perverting the course of justice.
Perry was jailed for three years at Cardiff Crown Court on Friday.
Judge David Aubrey QC said Perry smashed the windows of his untaxed car and tried to remove items from it on 21 February after the DVLA clamped it on School Street.
He was then seen running away from car after it had been set alight in the early hours of the next day.
One firefighter said: "If we had not extinguished the fire I believe it would have set alight to the houses and the cars parked close-by."
Perry later made a dishonest insurance claim against the vehicle and told police he had not damaged it, only spotting it was burning when he got out of bed to get a drink.
Defending, Edward Mitchard, said Perry had shown remorse and pleaded guilty at an early stage.
A man who set fire to his own clamped car then made a bogus insurance claim has been jailed.