Does Car Insurance Cover Theft?

Your stolen car will be covered if you added comprehensive coverage to your auto insurance policy. If your car is not recovered or was found heavily damaged, you will be reimbursed for the actual cash value of your car. Without comprehensive insurance, replacing your car will be entirely out of your own pocket.

While car insurance covers auto theft, that coverage does not extend to personal belongings inside your car, like your purse or laptop. However, these losses may be covered in a homeowners or renters policy.

How Do Car Insurance Companies Cover Theft?

Depending on the coverage in your auto policy, your car can be covered for various types of theft.

Stolen Vehicle

If your car was stolen and cannot be found, comprehensive insurance will pay for your car’s actual cash value, minus your deductible. Actual cash value is your car’s replacement cost minus depreciation, which accounts for mileage, age and wear and tear.

Car Modifications and Upgrades

Comprehensive coverage may cover aftermarket modifications, but it likely won’t cover things like your sound system. For that, you would need sound system insurance.

Some car insurance companies sell custom parts and equipment (CPE) endorsement, which covers alterations made to your vehicle. For instance, a CPE endorsement would help with replacement costs if a thief steals your expensive custom rims.

Loan and Lease Payoffs

Unfortunately, a stolen car won’t postpone or cancel your loan obligations. If you receive an insurance payout, you can use it to pay against any amount that you owe. However, you are still responsible for repaying the remaining balance that your settlement did not cover.

It is possible to gain coverage for the remaining balance if you have guaranteed asset protection (gap) insurance. Gap insurance covers the difference between your car insurer's settlement and the remaining amount on your auto loan. This coverage is usually required if your car down payment was less than 20%.

Does Car Insurance Cover Theft of Personal items?

Comprehensive coverage does not extend to personal belongings stolen from inside your car. However, these losses may be covered in the off-premises clause of your homeowners, condo or renters insurance policy. Off-premises coverage is typically 10% of your total personal property coverage.

Does Liability Insurance Cover a Stolen Car?

Liability is the most basic form of insurance and is mandatory in most U.S. states. Liability insurance will only cover damages and injuries to others when you can be held responsible. It will not cover your stolen car.

Comprehensive insurance is the only coverage that will step in when your car is stolen.

While there is no legal mandate for maintaining comprehensive insurance, it is almost always required if you are financing or leasing your car. If you’re still paying off your auto loan, you will likely be covered when your car is stolen.

What Should You Do if Your Car Is Stolen?

Take the following steps after confirming that your car was stolen:

  • Contact law enforcement to file a police report. This first step will allow police officers to search for your stolen vehicle. You'll also need a copy of the police report to file a car insurance claim.
  • File a car insurance claim. Your carrier may ask for supporting details, including the police report number, vehicle description, location of all keys to the stolen car, each driver’s contact details and your car financing company details. Once the claim process is complete, you will be reimbursed for your car’s actual cash value.
  • Call your homeowners or renters insurance provider. If personal belongings, like clothes and electronics, were stolen from your car, you can file a claim with your home insurance company to get reimbursed.
  • Contact your bank and other institutions if financial or sensitive documents were stolen from your car. You will need to request replacement credit cards and documents and set up a temporary fraud alert on your spending activity.

What Should You Do if Your Car Is Stolen and Recovered?

If your stolen car is recovered with no apparent damage, let your insurer know right away. They will assess your car for damages not immediately visible and pay for necessary repair costs.

If the repair costs are exorbitant, your insurer may declare the car a total loss and reimburse you for its actual cash value, minus your deductible.

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Do Car Insurance Companies Offer Anti-Theft Discounts?

Insurers offer anti-theft discounts to incentivize customers to buy cars with built-in security devices or to install them. In fact, insurance companies in 12 states are required to offer discounts to qualified policyholders.

  • Florida
  • Illinois
  • Kentucky
  • Louisiana
  • Massachusetts
  • Minnesota
  • New Mexico
  • New York
  • Pennsylvania
  • Rhode Island
  • Texas
  • Washington

Having one or more of the following security devices can qualify you for a car insurance discount.

  • Passive alarm: Many insurers favor passive anti-theft devices that switch on as soon as a driver turns the car off and disembarks. These include ignition cut-offs and car alarms. The average discount is 15% to 20%.
  • Active alarm: A cut-off system that drivers have to manually turn on to prevent the ignition or starter from operating. Most are activating by pushing a button on your car key.
  • Sound-only alarms: This sound alarm will alert you when a thief attempts to access your car. Most car insurers offer an average discount of 2% to 10% off your policy premium.
  • Engine-disabling alarm: This sophisticated passive alarm system activates and disables the ignition or engine whenever the alarm sounds.
  • Tracking or recovery system: This device helps car owners locate their car when stolen. LoJack and OnStar are two popular vehicle recovery companies that charge an annual subscription.

How Can You Protect Your Vehicle From Being Stolen?

These seven precautions can help deter auto theft:

  • Lock all car doors, windows, trunks and hatches.
  • Activate your anti-theft system.
  • Park in a garage or a well-lit space.
  • Park your vehicle near a guardrail, wall or some other front-end obstacle so thieves can't tow it away.
  • Don't write your personal information on your keychain. Thieves can use this info to break into your home and steal your car.
  • When you park on a street, turn your car's wheels toward the curb and lock the steering wheel to prevent thieves from moving it.
  • Ask a car dealership to etch your VIN onto your car windows so thieves will have a harder time reselling your car and its parts.

FAQs

Is catalytic converter theft covered by car insurance?

Catalytic converter theft is covered by insurance, but only if you have comprehensive coverage.

Does car insurance cover vandalism?

Your car insurance policy will cover vandalism only if you purchased comprehensive coverage.

What happens if your car is stolen and you still owe money on it?

Unless you purchased gap insurance, you are responsible for the remaining payments on your auto loan if your car is stolen and the insurance payout does not cover the full balance.

Key Takeaways

  • Comprehensive insurance is the only coverage that will reimburse you if your car is stolen.
  • If you file a claim for a stolen car, your insurer will reimburse you for your car’s actual cash value, minus your deductible.
  • File a police report and an insurance claim immediately after your vehicle is stolen.
  • Personal belongings stolen from inside your car are not covered by your car insurance — renters or homeowners insurance may cover these losses.

Car theft rates are on the rise in some areas and you’ll thank yourself for having comprehensive insurance in the event that it is stolen. Additionally, homeowners or renters insurance will reimburse you for stolen possessions, even if they occur outside of the home. SmartFinancial offers free auto insurance and homeowners quotes from local insurers offering the best value policies. Enter your zip code below to get started.

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