Does car insurance cover theft? What's covered and what's not.

Yahoo

5 days ago

About 850,000 vehicles were stolen last year in the U.S. That's one vehicle stolen every 37 seconds.
Here's an overview of insurance coverage for vehicle theft, what to do if your car is stolen, and tips for keeping your vehicle safe from thieves.
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Does car insurance cover theft?
Comprehensive car insurance covers vehicle theft, stolen car parts, and damage from vandalism or break-ins. However, it usually doesn't cover valuables stolen from the vehicle, although some policies offer a small amount of coverage for belongings.
Comprehensive coverage, an optional type of auto insurance, also covers damage from storms, fire, and other problems besides collisions. Your deductible — the amount you pay out of pocket — applies with every claim before comprehensive insurance kicks in.
If you purchased only liability coverage and did not opt for comprehensive insurance, you're not covered for auto theft.
Read more: Most common types of car insurance explained
Here's a more detailed look at how comprehensive insurance comes into play.
Stolen car that isn't recovered
Comprehensive insurance will pay the actual cash value of the stolen vehicle, minus your deductible. The actual cash value is the market value of the car — what it would have sold for just before it was stolen.
Stolen car that is recovered
More than 85% of stolen passenger vehicles are recovered, either by law enforcement or other means, according to the National Insurance Crime Bureau. Call your insurance company if the car is recovered. Here's what happens in the following scenarios:
The insurer hasn't paid the claim yet. A claims representative will evaluate your vehicle. Comprehensive insurance will pay for repairs if the vehicle was damaged during the theft. If repairs cost more than the car is worth, the insurer will declare the vehicle a total loss and cut a check for the vehicle's actual cash value, minus your deductible.
The insurer already paid the claim. The insurance company owns the car. You can get back any personal belongings left in the vehicle, and you may have the option to buy the car back from the insurer if it's still in good shape.
Stolen car parts
Comprehensive insurance covers standard car parts. Catalytic converters, for instance, became a favorite target of thieves several years ago because the parts contain precious metals. State Farm reported that the average claim for a catalytic converter theft was $2,900 in the first half of 2024.
But comprehensive insurance typically doesn't cover special parts or equipment that you've installed, such as custom rims or a new stereo system. Typically, you need custom parts and equipment insurance to cover those items.
Stolen personal belongings
Comprehensive car insurance generally doesn't cover valuables stolen from a car, such as a phone or laptop, although some policies will provide a limited amount of coverage up to $200. Homeowners and renters insurance cover personal items up to a certain limit, even when they're away from home.
If your car is stolen with valuable personal property inside it, you'll need to file two separate claims — an auto policy claim for the vehicle and a home or renters insurance claim for the belongings.
Vandalism or damage from the break-in
Comprehensive insurance covers damage from vandalism or a break-in, such as slashed tires, key scratches, and broken windows. The policy will pay for repairs, minus your deductible, unless the damage is so severe that the vehicle is declared a total loss. In that case, the insurance company will pay the actual cash value of the car.
How much will insurance pay for a stolen vehicle?
Insurers use industry databases to determine the actual cash value of the vehicle and will pay that amount minus your deductible. You can find market value estimates through resources such as J.D. Power and Kelley Blue Book.
Who gets the insurance check for a stolen car?
You get the check if you own the vehicle outright. Your leasing company gets the check if you leased the car, and your lender gets the check first if you still owe money on the vehicle. If the insurance settlement totals more than you owe, you'll get the difference. If the settlement is less than you owe, you'll be on the hook for the balance.
Extra insurance options for stolen vehicles
Here are a couple of options you can buy on top of comprehensive insurance to beef up coverage.
Instead of paying the depreciated value of your vehicle, new car replacement insurance pays for a new vehicle of the same make and model. The coverage is available only for newer vehicles.
Gap insurance pays the difference if you owe more on a car loan or lease than the insurance settlement. Car dealers often sell this coverage, but you can usually get it for less — about $20 a year — through a car insurance company, according to the Insurance Information Institute, or Triple-I.
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How long does it take for insurance to pay out on a stolen vehicle?
Insurers wait a period, such as 30 days, before finalizing a stolen car claim. This allows time for the car to be recovered.
What to do if your car is stolen
It's natural to feel shocked and upset when your car is stolen, but help is at hand. Follow these steps to improve your chances of recovery and ensure an efficient insurance claims process.
1. Call the police
The sooner you report the theft, the better. About a third of recovered vehicles are recovered on the same day they were stolen, and 45% are recovered within two days, according to the National Insurance Crime Bureau. The police will want to know the vehicle's make, model, color, license plate number, and vehicle identification number, or VIN, which can be found on your insurance documents. In addition, let the police know if the car is equipped with a GPS.
2. Contact your insurance company
Report the theft to your insurer even if you don't have comprehensive coverage. Quick notification will help protect you in case the thief causes injuries or property damage to others with your car, GEICO advises.
3. File an insurance claim
Start the claim as soon as possible. Be prepared to provide a police report case number, date and time of the event, finance or leasing company information, and personal belongings stolen with the vehicle. Your insurer will let you know what else it needs.
4. Notify your lender or leasing company
Contact your lender or leasing company and provide your car insurance information to streamline the process.
How to prevent car theft
Here are some easy ways to help prevent car theft.
Park in well-lit areas
As much as possible, park in areas with good lighting and visibility.
Lock the car and roll up the windows
'It may sound simple, but a surprising number of vehicle thefts occur because owners forget to lock their doors or leave their keys inside,' NICB says.
Avoid leaving valuables in the vehicle
Hide belongings, or, better yet, don't leave them in the vehicle.
Install an anti-theft device
Add an anti-theft device if your car doesn't include a factory-installed system. Many car insurance companies offer anti-theft device discounts. Ask your insurer about the equipment that qualifies.
Read more: How to get all the best car insurance discounts
Stolen vehicle FAQs
What are the most frequently stolen cars?
The five most stolen vehicles in 2024 were the Hyundai Elantra, Hyundai Sonata, Chevrolet Silverado 1500, Honda Accord, and Kia Optima, according to the NICB.
Will my insurance rates go up after my car is stolen?
Your rates may go up after a theft claim, but many other variables are also involved in setting rates, and insurers vary in how they weight the various factors.
Why won't my insurance cover my stolen car?
Your car insurance policy will cover theft only if you opted for comprehensive insurance. If you purchased only your state's required insurance, your car is not covered for theft.