Does Car Insurance Cover Theft? (It Depends... Find Out Why)

So if you have Comprehensive, then you have coverage for theft.

Some folks also call this “Full coverage”.

This term usually includes comprehensive coverage, which covers damage to your vehicle for anything other than collision accident related damage.

Whether your vehicle is stolen or it’s broken into and damaged, you will be reimbursed up to the actual cash value of your car.

Luckily, Comprehensive Coverage is relatively cheap, so its not too hard on the wallet and could end up paying off huge if you need a theft claim covered.

How Does Insurance Work When My Car is Stolen?

You will need to file a claim for your actual car, and possibly a claim through your renters or homeowners insurance for any contents stolen from inside.

Does Car Insurance Cover theft Of My Car With Liability Insurance?

No, car insurance does not cover theft of your car if you only have liability insurance. 

In fact, liability insurance doesn't cover your car at all. 

Liability auto insurance covers other people and their vehicles in case you were to be the fault of an accident while driving. 

Does Car Insurance Cover theft Of Personal Items Stolen Out Of My Car?

Does Car Insurance Cover the Parts of My Car if They are Stolen?

Sometimes, thieves will only take your wheels or your catalytic converter.

They are parts that have pretty high value and easily accessible.

Comprehensive coverage will also cover these events, so you want to be sure and carry a lower deductible.

Anything higher than $500 will just not save you enough premium to make it a good trade in value with the insurance company.

Does Comprehensive Cover my Car if it’s Stolen?

Yes, comprehensive coverage is the type of insurance that covers theft.

As long as you have that, you can make a claim through your car insurance for your vehicle.

How Much Does Comprehensive Coverage Pay?

Agreed Amount Comprehensive Coverage

If you own a high end vehicle or a collector car, you may have a special car insurance policy that pays the amount you agreed upon with the insurance company when the policy was set up.

This is known as “agreed amount” coverage and it's preferable because you get a specific amount from the car insurance provider, without negotiation or haggling.

What Will Happen If My Vehicle is Stolen and Then Recovered?

In America, less than half of all cars that are stolen are actually recovered. What happens is usually decided on a case-by-case basis, but here are the typical scenarios.

When the insurance company pays you a settlement check, they officially own that car. If the car is recovered, the insurance company would automatically take ownership.

In some cases, if you haven’t purchased a vehicle to replace the one that was stolen yet, the insurance company may ask you to return the claim amount, and keep your returned vehicle.

If the vehicle is found before they settle with you, you might get it back instead of a settlement.

In this case, you could still end up with a comprehensive claim because the car will likely be in rough shape.

They often have pieces broken, like the steering column, or missing, like the radio.

When a Stolen Car Claim is Denied

In some parts of the country, it is extremely common for folks to feel a sense of security in their neighborhoods.

They know their neighbors and they feel safe. They feel so safe they take unnecessary chances.

Last year, a client of mine called because he was really upset with his car insurance company.

Luckily, I was just helping him with his business insurance and I didn’t handle his car insurance, so he wasn’t upset with me.

The story goes…

For this story, we will call my client Jim. Apparently, Jim had this false sense of security about his neighborhood.

The car insurance company was trying to decline his claim after his car was stolen out of his driveway.

Nothing bad could ever happen where he lives.

So he left the keys inside his car every day.

Because he lived in a state with really warm weather most of the year, he also left the windows down.

So one day, he comes out and the car is just gone.

He goes and tells his claims adjuster why he thinks the car was stolen: he left the keys inside.

He didn’t even bother to hide them, they were just lying on the passenger seat!

Car Insurance companies are not in the business of being your friend.

They aren’t just going to pay claims because they want to be nice.

They are actually looking to save money and turn a profit every year.

They do this in part by not paying out on claims that they think they don’t have to pay.

This was one of those cases.

They told my client that they didn’t have to cover the claim because he displayed gross negligence in the protection of his own property.

Gross negligence is apparently grounds for claim denial.

So Jim takes his case all the way to his State Department of Insurance.

They tell him that he in fact was grossly negligent and he needed to stop keeping his keys in plane sight while his car was parked along a public street, without even a gate or fence to keep the random thief at bay.

In closing, just know that its really hard to fight a claim that is caused because you basically welcomed someone to steal your car or possessions by not taking common sense steps to keep your vehicle safe.

How Does Comprehensive Coverage Work?

Comprehensive coverage is optional, and is purchased by you when you initially get insurance.

It’s the only part of your insurance that covers your for theft or damage during a break-in.

Comprehensive will sometimes include coverage for a rental car (within certain limits) while they are going over your claim.

When you first file your claim, you will be assigned an adjuster.

They will gather all the information for your claim. 

Stolen Car Insurance Payout?

If your car was stolen and hasn’t been recovered, you will be offered the actual cash value as a settlement from your insurance company, minus your deductible.

If your car was damaged during a break-in, or stolen and then recovered, the insurance company will decide whether to fix it, or whether it’s a “total” loss.

There are loss limits set by the state that your insurance company will use to figure out if the car is worth fixing, or if they should write it off.

In most states, if the repairs exceed 80% of the depreciated value of the car, they will just say its “totaled” and give you a “total loss” settlement amount.

In return for taking this total loss settlement, you will sign your car over to the insurance company and they will sell it as a salvage title vehicle.

If they decide to fix your vehicle, under your comprehensive policy you will be reimbursed for the repairs, minus your deductible.

What Deductible Should I Carry for Comprehensive Coverage?

We always recommend using a lower deductible with your comprehensive coverage, because there is not much of a discount for going with a higher deductible.

You might save $20 to $30 per month on your premiums, but it could be the difference between a $250 deductible and a $1000 deductible.

What Do I Do When My Car is Broken Into or Stolen?

The first thing you need to do when you notice your vehicle was stolen or broken into is report it to the police.

The best chance to find your car happens in the first 24 hours, so the sooner the better.

You need the police report number to start filing the insurance claim, which the officer will give you as soon as you report it.

You will need some information to give to the police. 

This includes:

Next, you need to file your claim.

Your insurance company will also need information to help them figure out the payout on your claim.

This might include:

Last, if you’re financing or leasing, you’ll need to let your lender know what happened right away.

How Much Am I Covered For?

Your comprehensive policy will cover you for theft and damage from break-ins.

The insurance company will typically pay you the actual cash value for your car, minus your deductible.

If you have “rental car” coverage on the policy, you should also be able to have your rental car reimbursed while you’re waiting for your claim to be processed.

How Stolen Car Claims Are Settled

In order to determine the actual cash value of your vehicle, the adjuster will first look at how old your car is, as well as the make, model, and any history of accidents.

They will also use the Kelley Blue Book Value, as well as the wholesale cost of the car.

As discussed, it’s their job to give you the lowest fair value offer they can.

You should research the fair value of your car, comparing make, model, age, mileage, using Kelley Blue Book, and Google.

You can then use that information to help decide whether you should take their offer, or dispute it.

If you counter the offer, come back with solid research, and receipts or photos for any upgrades to your vehicle.

You may also argue things like lower mileage, which impacts a car’s value.

The trouble with a mileage argument is having proof.

Unless you have some kind of tracking mechanism or recently had your car serviced and can show the odometer reading from the repair shop’s receipt, this is a tough argument to win.

Does Car Insurance Cover Theft of Personal Items Inside the Car?

For the most part, no, it does not cover theft of anything you leave inside the car.

They make exceptions for C.D.’s and cassette tapes, but since no one really uses them anymore, it’s not relevant.

Your homeowners insurance or renters insurance will cover the personal items taken from your car in the event of a break-in, up to certain limits.

It’s best to check these policies to see what they will and won’t cover. It may motivate you to make changes to what stays in your car and what doesn’t.

If, for example, you leave your golf clubs in your car, your auto insurance will not cover them, but you can put a claim through your homeowners or renters insurance for reimbursement.

If you have a really high homeowners insurance deductible, you may have a problem.

A lot of people go with a high deductible on these policies to save money.

So if you have a $1,000 or $2,500 deductible, it might not make sense to file the claim.

How to Prevent Theft

These are really some very basic steps everyone can take to keep their car from being stolen.

Remember, any claim is going to make your future policy costs go up, so taking some basic steps to manage your risk is a good idea:

Conclusion

According to the National Insurance Crime Bureau, vehicle theft increased by almost 10% in 2020. They guess this is due to the pandemic related socio-economic disruptions.

Comprehensive coverage and practicing theft prevention techniques is more important than ever.

Comprehensive coverage will cover your vehicle in the event of theft or damage from a break-in.
Your homeowners or renters insurance will cover any contents that were stolen.
When you file the insurance claim, you will be offered reimbursement, minus your deductible.

If your car is written off as a loss, or stolen and not recovered, you’ll be reimbursed up to the actual cash value determined by your insurance adjuster.

It’s always prudent to do some research yourself to make sure this is the fairest offer for you.