Does Auto Insurance Cover Theft?

By Jennifer Brozic 08/22/2022 3:10pm

With vehicles commanding such high prices these days, it’s more important than ever to protect yourself from a financial loss if someone steals your car.

You know your auto insurance can cover repairs and injuries if you’re in an accident. But what about car theft?

With the average price of a new vehicle hitting new highs — at $48,182 in July 2022 — you’ll want to find out what coverage you need to protect yourself from car theft or car damage from thieves.

According to the National Insurance Crime Bureau (NICB), vehicle thefts skyrocketed to 936,315 in 2021, up from 880,595 in 2020 and 794,019 in 2019.

If you want to make sure you’re protected, it’s important to understand the type of coverage you need, how it works, and what it will and won’t pay to repair or replace.

How Do I Know if My Auto Insurance Policy Covers Theft?

Finding out if your auto insurance covers theft is simple. If you have comprehensive, you’re covered. If you don’t, you’re not covered for what’s sometimes called grand theft auto. When you purchase an insurance policy, there are lots of options from which to choose. But comprehensive is the only coverage that protects you and your vehicle against theft.

What Comprehensive Covers

Having comprehensive coverage can help protect you if:

Police Don’t Recover your Vehicle. If someone steals your car and the police don’t get it back, comprehensive coverage will pay to replace it — up to the vehicle’s actual cash value. Start by finding out your vehicle’s Kelley Blue Book value.
Your vehicle gets stolen and recovered. According to the NICB, law enforcement recovered 690,539 stolen vehicles in 2020, representing 78% of the total stolen. However, when your car gets recovered, it doesn’t mean it’s in the same condition as before the thief took off with it. If the police recover your car and there’s damage, your insurer will pay for repair costs.
Car parts get stolen. Sometimes car thieves won’t drive off with the entire vehicle. Instead, they’ll help themselves to certain parts, such as the tires, rims, or the catalytic converter. If parts of your car are stolen, comprehensive coverage will pay to replace them.
Your car receives damage during a break-in. When someone steals or attempts to steal your vehicle or parts of your vehicle, comprehensive covers damage that occurs during the theft. So, if a car thief breaks a window or door lock or goes drag racing at 3 a.m. and crashes your car, your policy will cover you.

What Comprehensive Doesn’t Cover

Comprehensive coverage can help pay for vehicle repair or replacement costs. However, auto insurance doesn’t cover personal property like the laptop you left on the front seat or the set of golf clubs that you stored in the trunk after a car theft.

But your homeowner’s policy or renter’s insurance might.

How Does Comprehensive Coverage Work?

In general, comprehensive coverage pays up to the vehicle’s actual cash value at the time a covered incident occurs. But before your coverage kicks in, you must pay your deductible. After you cover the deductible, your insurance company will pay for the remaining expenses up to the current market value of your vehicle.

What Is Actual Cash Value?

“Comprehensive coverage is going to pay you the actual cash value of your car minus your deductible,” says Josh Damico, vice president of insurance operations at Jerry, a car insurance comparison service.

But that doesn’t mean the insurance company will write you a check for what you paid for the car. The actual cash value of your vehicle is how much the vehicle is worth in today’s dollars. Because cars depreciate so quickly, you probably won’t be able to buy a brand-new version of the vehicle you’re driving with the money from the insurance company — unless you have new vehicle replacement coverage.

If you purchased new vehicle replacement coverage, the insurance company would reimburse you for the cost of a brand new vehicle, not the depreciated value, of a similar car. This type of coverage is typically only available for the first year you own a car, and you must be the original owner.

Gap insurance may also help if you purchased this add-on coverage. If your car gets stolen and the insurer says it’s totaled, this insurance covers the gap between what you owe on a loan or lease and what the insurer paid you for the depreciated value of the totaled car.

How Do I Know How Much My Car is Worth?

According to Damico, the easiest way to find out the approximate value of your vehicle is to use a site like Kelley Blue Book. You would enter all the details the insurance adjuster uses. This includes the vehicle identification number (VIN), year, make, model, and features on the car when it came from the manufacturer. If you added custom features after buying the car, they wouldn’t be included in the value unless you have custom equipment coverage.

If you disagree with the adjuster’s assessment of the car’s value, you can ask to speak to them so you can review the factors that went into determining the actual cash value, or ACV.

“The insured can absolutely have a conversation with the insurer to make sure they have all of the features that were on the vehicle included in the estimate,” Damico said. “It’s not unheard of for an adjuster to miss a feature that was on a car. Those numbers are not firm; they’re not final. They can be discussed, and to some extent, negotiated.”

Steps to Take if Your Car Gets Stolen

If someone steals your car, there are several things you need to do.

1. Make Sure the Car Got Stolen

This step might seem silly. After all, your car is missing. Someone stole it, right? Not necessarily. “The first thing we ask our customers to do is to make sure it was actually stolen,” Damico said. What you do next depends on where you parked your car.

If you parked it in your driveway, check with everyone who had access to it. Maybe someone borrowed it without telling you. If you parked it in a lot or on the street, make sure the car did not get impounded. You can check by calling the police department and giving them your license plate number. Or sometimes there are signs in parking lots and on the street that list the phone number you need to call to find out if it got towed.

2. File a Police Report

“Once you’re sure it’s been stolen, the first thing you want to do is file a police report — ideally within 24 hours of the car being stolen,” Damico said. Be prepared to provide as much information as possible about the vehicle, including:

Your driver’s license number
The car’s VIN
The vehicle’s license plate number
Year, make, and model of the vehicle
The car’s last known location
The approximate time the car was stolen
A list of your belongings that were inside the car
GPS tracking system, if available

“If there are any identifying marks like a bumper sticker, dents, or a ding, that’s also helpful,” according to Damico.

3. Contact Your Auto Insurance Company

After you notify the police, you need to report the theft to your insurer and file an auto insurance claim. The insurance company will ask for much of the same information you gave the police. Having that information readily available can help the process go more smoothly.

“If you can get a copy of the report, that’s the first thing the carrier’s going to want. You may not get a copy of the police report right away. [But] if you have that available, it can really speed things up with the carrier,” Damico advised.

4. Contact Your Homeowners or Renter’s Insurance Company

Many people have a common misconception that their auto insurance company will cover theft of personal property if someone steals goods from their vehicle, Damico says. But that’s not true. However, your homeowner’s insurance or renter’s policy might.

If personal items were in your car, you might need to file a claim with your homeowners or renter’s insurance carrier.

How Long Does it Take for My Theft Claim Payout?

“Auto insurance companies will only deny a claim if they have found and proven that there was some type of fraud associated with the claim,” says Damico. But that doesn’t mean the insurance company resolves your claim overnight. The time it takes to settle a claim depends on the insurer. Different companies have different timelines.

“What we generally see is a two- to four-week period [to see] if the police can locate the vehicle,” Damico said. “It largely depends on whether the carrier suspects there might be any type of fraud going on with the claim.” If the carrier suspects fraud, it may take longer.

If you’re used to driving your car every day, two to four weeks is a long time to be without a set of wheels. And you’ll need a way to get around while you’re waiting for the police to find it. If your policy includes rental car reimbursement, your insurer will pay for the cost of a rental while the police search for your vehicle. If not, you’ll have to cover the cost out-of-pocket or find another way to get around.