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With vehicle prices soaring, protecting yourself from financial loss in the event of car theft is more critical than ever. Auto insurance covers accidents, but does auto insurance cover theft? Understanding the right coverage will ensure you’re protected.
As of July 2022, the average price of a new vehicle was $48,182, making it crucial to have the right coverage to avoid financial strain in the event of car theft or damage by thieves. In 2021 alone, vehicle thefts skyrocketed to 936,315, according to the National Insurance Crime Bureau (NICB). Here’s how you can protect yourself.
Does Auto Insurance Cover Theft and What Type of Insurance Covers?
The response to the query “Is theft covered by motor insurance?” depends on your policy. To be protected against theft, you need comprehensive coverage. This part of your policy covers you in case your car is stolen or damaged during an attempted theft. Without comprehensive coverage, you’re not covered for grand theft auto or theft-related damage.
What Does Comprehensive Coverage Include?
Comprehensive coverage provides protection in several key areas, ensuring you’re financially safe in various theft scenarios:
- Unrecovered Stolen Vehicle: If your stolen car isn’t recovered, comprehensive coverage will pay you the vehicle’s actual cash value. This amount is determined by your car’s market value at the time of the theft.
- Recovered Vehicle with Damage: If the police recover your stolen vehicle but it’s damaged, comprehensive coverage covers the repair costs.
- Stolen Parts: If thieves take specific parts like your tires or catalytic converter, comprehensive will cover replacement costs.
- Damage from Theft Attempts: Comprehensive covers damage caused by thieves breaking in, whether it’s a broken window, damaged locks, or reckless driving damage.
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What Comprehensive Coverage Doesn’t Include
While comprehensive coverage protects your car, it won’t cover personal items stolen from your vehicle, such as a laptop or other valuables. For those, you’ll need to turn to your homeowner’s or renter’s insurance policy.
How Does Comprehensive Coverage Work?
Comprehensive insurance covers up to the vehicle’s actual cash value (ACV) at the time of the theft. However, before this coverage kicks in, you must pay your deductible. After the deductible, your insurance will handle the rest, up to the market value of the car.
Actual Cash Value Explained
The ACV of your vehicle refers to its worth in today’s market, not what you originally paid for it. As cars depreciate quickly, you may not receive enough from the insurer to buy a brand-new version of your stolen vehicle unless you have new vehicle replacement coverage or gap insurance.
- New Vehicle Replacement Coverage: This option reimburses the cost of a brand-new vehicle of the same make and model, but it’s typically only available for the first year of ownership.
- Gap Insurance: If you owe more on your car loan than the car’s current value, gap insurance covers the difference.
How to Determine Your Vehicle’s Value
To find your car’s actual cash value, use resources like Kelley Blue Book. Enter your vehicle details, such as the year, make, model, and VIN, to get an estimate. If you believe the insurance adjuster undervalued your car, you can negotiate by reviewing the details they considered.
Steps to Take If Your Car Gets Stolen
If your car is stolen, follow these steps to ensure a smoother claims process:
- Confirm the Car Was Stolen: First, ensure your car wasn’t towed or borrowed by someone with access.
- File a Police Report: Provide details like your driver’s license, VIN, license plate number, and a list of any stolen belongings.
- Notify Your Insurance Company: File a claim with your auto insurance company, providing the same details you gave the police.
- Report Stolen Items to Homeowners or Renters Insurance: If any personal property was stolen, file a separate claim with your homeowner’s or renter’s insurance.
How Long Does a Theft Claim Take?
The time to settle a theft claim can vary depending on the insurer. Typically, insurers will wait 2–4 weeks to see if the police recover the stolen vehicle. If fraud is suspected, the process may take longer. If your policy includes rental car reimbursement, the insurance company will pay for a rental car while your stolen vehicle situation is resolved.
Conclusion: Does Auto Insurance Cover Theft?
In conclusion, when it comes to the question “does auto insurance cover theft,” the answer is yes, provided you have comprehensive coverage. This policy safeguards you against theft-related damages and the costs of replacing a stolen vehicle. For even greater protection, consider options such as new vehicle replacement or gap insurance. Being well-informed about your coverage will help you stay prepared and financially secure if your car is ever stolen.
