Does Auto Insurance Cover Theft?
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You step out onto a parking lot, confident that you’ll find your car but you find an empty space instead. Your heart races as you start to think that your car has been stolen. Whether you walk a few more paces and remember that you actually parked someplace else, or you come to the realization that your car really was stolen, it’s time to think about your insurance.
Does car insurance cover theft?
The answer is yes, but it depends on your policy.
In order to have your car insurance cover theft, you need comprehensive coverage. While almost every state will require a minimum amount of liability insurance—which typically covers a certain amount of bodily injury and property damage liability—comprehensive coverage is a different story.
Comprehensive coverage is an additional coverage option not required by law. But, it reimburses you if your car is stolen. It also covers other incidental damages to your car like fire, flood, vandalism, and hail.
So, while you likely have minimum liability insurance which helps the liable party pay for the damages done to another car, comprehensive coverage covers you when you can’t pin down an “at fault” party.
The Cost of Comprehensive Coverage
The latest data given by the National Association of Insurance Commissioners shows that the average cost of comprehensive coverage premiums in the US was about $160 a year in 2017. Taken from that same data, the average liability premium in the US was about $600 a year in 2017.
That said, the cost of your insurance policy will depend on several factors, including:
Where you live
The Benefits of Comprehensive Coverage
The Insurance Information Institute says that comprehensive coverage accounts for about 16 cents of every dollar a driver pays for insurance. That’s pretty cost-effective for coverage that could reimburse you for:
Earthquakes and floods
Falling objects (including hail, trees, rocks, and even an asteroid)
Rioting and vandalism
Damage done by animals
That’s probably a bit more comprehensive than you were expecting.
Now, let’s talk more about auto theft. How often does it happen? Are you at high risk? If you opt for comprehensive coverage, does auto insurance cover theft, completely?
Auto Theft Statistics
The good news is that rates of auto theft are trending downward. In 2019, most vehicles were stolen at a rate of 219.9 per 100,000 people. This is a decrease from 230.2 in 2018.
The total number of vehicles stolen in 2019 was 721,885. This is a decrease from 751,904 the year before.
The top five most frequently stolen cars in 2019 were:
Ford Pickup (full size)
Chevrolet Pickup (full size)
While auto theft is trending downward, it still happens every 42 seconds in the US, and you should take reasonable steps toward financially protecting yourself. This is especially true if you live in a state with high rates of auto theft.
According to data from 2019, the five states with the most auto theft are:
California dwarfs the other states on this top five list with a rate of 141,757 car thefts in 2019, while Texas follows distantly at 77,489 car thefts. Florida, Washington, and Georgia report between 20,000-30,000 car thefts a year.
Be especially wary if you live in an urban area as car thefts happen 2.2 times more frequently in urban areas than in rural areas.
Is Comprehensive Coverage Worth It for Car Theft?
While comprehensive coverage can offer you ample financial protection, it is still important to assess whether the value of your car justifies your amount of coverage.
Keep in mind that your insurance will never pay for more than what your car is worth. The value of your car is not based on the price at the dealership—it’s not even based on how much you paid for it. A car that has been purchased and driven depreciates in value and this depreciation may reduce the value of your coverage.
For example, if your car is stolen with a market value of $2,000 and your deductible is $1,000, your insurance claims check will only amount to $1,000. You won’t get the full $2,000 that you lost, nor will you get back the amount you originally paid for the car.
If you happen to have a deductible as high as $2,000, your insurance company deems you responsible for paying the entire $2,000 and you won’t get any reimbursement.
If Your Car Has Depreciated Significantly
For a car that has depreciated far below its original sticker price, it may be worth it to lower your deductible, therefore lowering the amount you are responsible for in the event of a theft (or any other incident covered by your insurance). That said, a lower deductible will lead to a higher premium.
If you are able to pay a higher deductible in the event of a theft, make sure it isn’t too close to the cash value of your car (i.e. a $2,000 deductible on a car worth $2,200 —in this scenario, you’re only getting a $200 check from insurance which may not be worth filing a claim over).
More simply, if your car is worth less than $1,000 or less than 10 times the premium, comprehensive coverage may not be cost effective.
How to Avoid Auto Theft
Dealing with the theft of a motor vehicle can be dizzying, but there are some steps you can take to prevent your car from being a target.
Keep Out of Harm’s Way
Practice daily awareness by:
Locking your doors
Taking your keys out of the car
Closing your windows completely
Parking in well-lit areas
Avoiding leaving valuable items in plain view
Make Your Car Look Difficult to Steal
There are ways to audibly and visually signal to a potential thief that approaching your car will be more trouble than it's worth, such as:
Audible alarms – You can buy an alarm system for at least $50 or up to $200 depending on the complexity of the system.
Steering wheel locks – The price range for steering wheel locks is $30 to $100, depending on the quality of the materials. A competent lock will be over $40.
Brake pedal locks – These range from $20 to $50.
Tip: Not only will you enjoy peace of mind if you invest in some anti-theft devices, but you may also discover some savings. Some anti-theft devices may even get you a discount on your insurance. Talk to your insurance provider to see what anti-theft discounts are offered.
Make Your Car Difficult to Get Away With
You can thwart a thief by immobilizing your car with these devices:
Smart keys – Some smart keys will immobilize your car unless the key fob is present, even if someone is able to get into the car. It may be worth considering this when you purchase a car.
Kill switches – Kill switches can disable your fuel or your car battery. Most kill switches require you to go under your hood or even under your car to enable them, so they are best for cars that are sitting in storage and aren’t used often. Car battery switches are the simplest to install and cost around $50.
Track Your Vehicle
You can invest in a tracking system that alerts you when your vehicle has been moved and allows you and the police to remotely track its whereabouts. The cost of a system like this varies depending on features (and some require a monthly subscription). Many fall in the $100 to $150 range.
What Should You Do if Your Car is Stolen?
If you discover your car has been stolen (not towed or parked somewhere else), there are two calls that must be made immediately: one to the police, and one to your insurance company.
Call the Police
Report the theft to the police and make sure you can give them the following information about your car:
The make, model, color, and year of your car
The vehicle identification number (VIN)
The license plate number
Where you last saw your car
Information about GPS tracking, if you have it
Call Your Car Insurance Company
Call your car insurance company within 24 hours of the theft to begin the claims process. If you have comprehensive insurance coverage, your agent will help you file a claim. Your car may be recovered, so many insurance companies will have a waiting period before finalizing an insurance claim in case your car is found within that period. Your insurance company may ask for a list of any valuables that were in the car and a copy of the police report.
Prepare for the Aftermath
While you wait for either your car to be recovered or for a claims check to be issued, you should prepare for the possibility that your car may not be recovered. If you have comprehensive insurance coverage, you will be given a claims check for the market value of your car and some policies may even give you money for a rental car.
You should also prepare for the possibility that your car may be recovered (about 60% of them are), but it may be severely damaged because many car thieves strip cars for parts. If the insurance company deems the car totaled, you will be given a check for the market value of the car.
You Are Not Powerless
Nearly half of vehicle theft is due to driver error. Knowing this can empower you to remain vigilant about locking your doors, remembering to take your keys out of the car, and implementing all other reasonable precautions.
If all else fails, be sure you have an insurance plan that can give you at least some financial protection. And you can find that plan at Online Auto Insurance.
Find the Coverage You Need with Online Auto Insurance
Compare rates and find a plan that gives you the protection you need with Online Auto Insurance. Our comparison tools allow you to search multiple insurance providers to find the best rates. Our resource articles can also help you find answers to common questions like “Can you get auto insurance without a license?” or “What’s the difference between full coverage and liability insurance?”
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National Association of Insurance Commissioners. Auto Insurance Database Report 2016/2017. https://www.naic.org/prod_serv/AUT-PB-16.pdf
Insurance Information Institute. What is Covered by a Basic Auto Insurance Policy. https://www.iii.org/article/what-covered-basic-auto-insurance-policy
Insurance Information Institute. Nine Ways to Lower Your Auto Insurance Costs. https://www.iii.org/article/nine-ways-to-lower-your-auto-insurance-costs
Insurance Information Institute. 2020s Disasters Highlight Need to Insure Cars Against Fire, Flood Damage. https://www.iii.org/press-release/2020s-disasters-highlight-need-to-insure-cars-against-fire-flood-damage-092520
Insurance Information Institute. Eight Surprising Ways Comprehensive Auto Insurance Works For You. https://www.iii.org/press-release/eight-surprising-ways-comprehensive-auto-insurance-works-for-you-041514
Insurance Information Institute. Facts + Statistics: Auto Theft. https://www.iii.org/fact-statistic/facts-statistics-auto-theft
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The Drive. 3 Best Steering Wheel Locks (2020). https://www.thedrive.com/reviews/28217/best-steering-wheel-locks
Dash Cameras. 5 Best Ways to Install a Kill Switch in Your Car (anti-theft). https://dashcameras.net/car-kill-switch/
Traffic Safety Marketing. Vehicle Theft Protection. https://www.trafficsafetymarketing.gov/get-materials/vehicle-safety/vehicle-theft-prevention?_ga=2.212099228.946351115.1605935855-2096498700.1605935855