Does Car Insurance Cover Theft?

Fran Majidi
March 10, 2020

It’s happened to the best of us: We’ve all panicked after being unable to find our car in a crowded parking lot. The feeling you get when it occurs to you that someone may have stolen your car and all your stuff in it is one you don’t easily forget. Fortunately, most of us end up finding our cars. And yet, most of us don’t take the false alarm as an opportunity to make sure we’re protected if that nightmare ever does come true. This is why most Americans don’t have comprehensive coverage on their auto insurance policies. Also, most people don’t understand how to get reimbursed for their stolen items.

A surprisingly large number of Americans have no insurance at all, and the majority who do only have the minimum required liability coverage on their cars, thinking it’s enough to cover a catastrophe. If you thought your liability insurance covers a stolen car and your possessions, think again! In fact, even if you were in a car accident liability insurance wouldn’t cover your losses, only the other driver’s -- if the accident was your fault.

Well, what about theft of a car or vandalism of a vehicle? Only comprehensive insurance would cover these two instances. Car insurance doesn’t have to break the bank, if you know how to shop for it wisely. Using smart matching technology, SmartFinancial can compare auto insurance quotes for you in three minutes after you fill out a simple form.

As for your stuff that got stolen along with the car, it gets a little more complicated to get coverage for your loss, but not if you have renters insurance, condo insurance or home insurance. Read on to see how it all works.

What Does Comprehensive Insurance Cover?

Despite its name comprehensive insurance doesn’t cover everything. It won’t help you much if you find yourself in a car wreck and it is not intended to cover stolen or damaged belongings that you keep in your car.

Comprehensive insurance is helpful if you have an accident with an animal on the road, if your car gets vandalized and if your car is stolen. It’ll also take care of a shattered windshield. If your car was stolen, you’ll have to file a police report and then, using that report, file a claim with your insurance company.

You’ll be reimbursed much sooner if your car has been vandalized and needs small fixes. If your car was stolen, you’ll have a wait period to see if the car can be recovered and, depending on your policy, your car will be evaluated for custom parts, paint, rims and any aftermarket add-ons.

How Much Does Comprehensive Insurance Cost?

This question brings up another common misunderstanding about comprehensive coverage. Some people think that in order to buy comprehensive insurance they have to buy collision coverage too, but that’s not true.

You can buy comprehensive insurance as a standalone. It usually costs about $20 to $30 a month only. Most importantly, it’s the only coverage that will pay out for a stolen automobile.

What Else Does Comprehensive Insurance Cover?

In addition to covering stolen and vandalized/damaged vehicles, comprehensive insurance also covers glass breakage, which often goes hand-in-hand with car theft and/or vandalism of a car. It will also cover your car if you accidentally hit an animal on the road.

Will Comprehensive Insurance Cover Custom Parts and Equipment?

No, there’s a type of insurance commonly called custom parts and equipment (CPE) coverage. This type of coverage would cover paint jobs, grilles, navigation systems, car stereos and anything installed after the original manufacturer’s vehicle was rolled out.

Many people mistakenly think comprehensive insurance will cover aftermarket or custom parts and modifications, but it does not. Custom rims, for instance, are not covered.

If your car is stolen you will only be paid the market value of your car, minus the bells and whistles. Generally speaking, any equipment worth $1,000 or less is covered with comprehensive coverage. The $1,000 is usually a combined limit, so if you spent $500 on rims and $700 on a spoiler, you’ll need $300 in CPE coverage or simply lose $300.

There is usually a maximum coverage with CPE. $5,000 is the usual cap on CPE coverage.

What if I Owe More for the Car than the Market Value of the Car?

If you don’t have gap insurance, also called loan-lease insurance, you’re at a loss if you own more than the car is worth according to Kelley Blue Book. The way this type of insurance works is that it pays the remainder of what you owe on the car after your insurance pays you out for a total loss (if it’s stolen and not recovered).

If you’re not sure if you owe more than your car’s worth, it’s important to look into it because you may be underinsured without gap coverage. Nearly all insurers offer gap insurance. Visit here to compare gap insurance rates at no charge. Just fill out a form and SmartFinancial will put you in touch with an agent ready to give you quotes.

On average, gap coverage is an extra $5 or $10 a month and very well worth the cost if you have an upside-down loan on your car. Without gap insurance, you’ll have to keep making payments for a car in the junkyard!

What About My Personal Property that Got Stolen?

If you kept a laptop, expensive equipment, musical instruments and cell phones in your stolen car, we hope you have renters insurance or some sort of property insurance, like home insurance or condo insurance to cover you. Personal property coverage will cover your belongings even when they are stolen outside of the home, in your car for instance. In fact, it’s property insurance that also covers you if you lose a bicycle!

It’s important to cover all your bases when it comes to buying insurance because car insurance doesn’t cover everything if your car is stolen.

It’s always a good idea to have an inventory of your belongings in case incidents like car theft happen. An inventory would be ample proof that you owned the items for which you’re trying to be reimbursed.

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