How Does Auto Insurance Cover Thefts?

Vehicles can either be stolen in their entirety, along with their contents, or they may be broken into to pilfer items from inside. Additionally, cars may remain unrecovered or reappear days later with varying degrees of damage. Sometimes, only specific components may be taken, leaving the vehicle in its original location. You need to have Comprehensive coverage to be able to make a claim for an auto theft as this coverage handles such losses. Depending on the circumstances, your car insurance may cover the replacement cost of the stolen vehicle, facilitate its repair, or not provide compensation for certain stolen items. Let’s explore different scenarios to understand how your auto insurance policy might respond to various thefts.

When motorists are unable to locate their vehicles, they should initially explore several possibilities. These include the chance of it being towed due to illegal parking, repossessed due to unpaid loans, or taken by a family member who possesses the keys. If they are certain that their vehicle has been stolen, they should promptly contact both the police and their insurance company. Providing crucial information such as the Vehicle Identification Number (VIN), make, model, color, and any unique identifying features is vital. Additionally, informing the police about any installed tracking devices on the vehicle can be beneficial in the recovery process.

Stolen Car Is Never Recovered

Typically, insurance companies wait for about 30 days for the vehicle to turn up. If there is no news in that period, they assume that it will never be found. Then, they typically pay the Actual Cash Value of the automobile that takes depreciation into account, minus deductibles. Again, you need to have Comprehensive coverage in your vehicle insurance policy to be able to receive any compensation for auto thefts.

If you have a loan or lease on the vehicle, the insurer may pay directly to the lender or the lease company and the claim money may pay off your loan. However, the Actual Cash Value (ACV) may not pay the whole loan if your vehicle’s current value is lower than the outstanding loan. If you have Gap insurance, it may kick in to pay the difference between the ACV and the outstanding loan. If not, you may have to pay the remainder of the loan out of pocket.

Stolen Auto Is Found with Damage

According to the National Insurance Crime Bureau (NICB) report, more than 85 percent of stolen passenger vehicles were recovered, and 34 percent of them were found within a day of being reported stolen in 2022. If the vehicle turns up damaged after a few days and before your Comprehensive claim is settled, your insurer would pay for the cost of repairs if it is economical to repair the vehicle. They may still total it if the car is damaged beyond repair and pay you ACV.

Stolen Vehicle Is Found After the Claim Is Settled

If you have already settled a stolen auto claim, the vehicle technically belongs to the insurer as they paid you for it. Regardless of its title status, condition at the time and however long time passed, you need to inform the company that it has turned up. It is their property now and they can do whatever they want with it, including selling it.

Partial Theft of Car Parts

In some cases, only a part of your vehicle may be stolen, such as the wheels, stereo system, or catalytic converter. Comprehensive coverage may still apply in such scenarios, and your insurance company should cover the cost of repairing or replacing the stolen parts, again subject to your deductible.

Custom Parts and Equipment Coverage (CPE)

A standard car insurance coverage often has a maximum limit as to parts that were not installed in the factory. If you have customized your vehicle, you need to inform your insurer and get a CPE endorsement on your policy to be covered for the theft and damage to these parts and equipment. Otherwise, your insurer may not pay for these parts or pay up to a predetermined limit depending on your policy terms.

Theft of Personal Possessions

Regardless of whether they were stolen with the car or from the car, your vehicle insurance policy typically doesn’t cover your personal items in the vehicle because they aren’t considered part of the automobile. You may be able to claim on your home content insurance for the items you have taken with you. For example, your golf bag in the boot or a laptop or any other gadget isn’t covered by auto insurance. In the same way, if the vehicle turns up after the claim is paid, you can keep these items because the insurer didn’t pay for them. On the other hand, any damage to the vehicle during the process of stealing the items within would be covered by Comprehensive coverage.

Optional Coverage and Claims

If you have Rental Car Reimbursement coverage on your policy, you may be able to rent a car because yours is stolen. So, you need to check if you have optional coverage and their terms to make the most of them.

Many motorists in the US buy full coverage vehicle insurance policies that come with Collision, Comprehensive and Liability coverage. Comprehensive coverage portion of such policies handle auto thefts, vandalism, fire, weather related damages and more. If you have a liability-only policy, you cannot make a claim for a stolen auto since this coverage has no provisions for physical damages to your own automobile.

Although Comprehensive coverage claims are often not your fault, your claim may still be considered when the insurer calculates your next renewal quote. So, this may result in only a slight premium increase or a bit more depending on the circumstances, size of claim, the insurer and your driving record.