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Does car insurance cover theft?

Fact-checked with HomeInsurance.com

Vehicle thefts are more common than you might think. According to the FBI in 2017, there were roughly 773,139 reported car thefts in the United States. You might be wondering what happens after your car gets stolen. Is it covered by insurance, or are you on the hook for the full cost of a replacement vehicle?

The short answer is this: if you have comprehensive coverage and an actual cash value policy, your car insurance will cover theft. Purchasing a car is a huge expense on its own, and if you’re not prepared to have to replace it unexpectedly due to theft, insurance compensation can be a huge relief.

Does standard car insurance cover theft?

In short, no—a standard car insurance policy is limited in what it covers, including theft. “Standard” means the minimum amount of car insurance that your state requires all drivers to have. This will always include liability and sometimes includes uninsured/underinsured motorist coverage. 

Comprehensive coverage

Comprehensive coverage, which is an optional add-on policy, is the only coverage that includes theft. In addition to theft, it also covers damage that occurs during a break-in.

You can think of comprehensive coverage as a catch-all policy. It protects your vehicle from most circumstances besides a typical car accident, which is covered by collision insurance. Examples of other situations fall under comprehensive coverage include collision with an animal, a fire, glass damage or falling objects. 

In some cases, comprehensive car insurance policies also come with rental car reimbursement. So if your car is stolen, your comprehensive insurance will pay for a replacement car while your theft claim is being processed. Just keep in mind that rental car reimbursement will only cover fees up to your policy’s limit.

Why liability excludes theft

You might be wondering why liability coverage doesn’t cover theft. The reason is that as a driver, you aren’t responsible for the theft. Liability insurance covers you if you accidentally cause an accident and another driver gets hurt, or if you damage someone else’s property. Because there is no personal liability involved in theft, it’s not covered by that portion of your policy.

The various types of auto insurance coverage can seem confusing, but it’s important to understand each one in case you have to file a claim. If you have questions about your auto insurance policy, check out this guide

How much are you covered for?

If your car is stolen, your insurance provider will most likely declare a total loss claim. You can expect to receive a payout for the actual cash value (ACV) of your vehicle. Most auto insurance policies reimburse drivers through ACV by default, because it’s the cheapest option. That payout is what you’ll use to purchase a new car.

Actual Cash Value (ACV)

ACV is calculated by taking the original value of the car, and subtracting depreciation. Cars depreciate the minute you drive off the lot, but it also accounts for the make and model of the car, its history of accidents, its overall condition and its age. When you receive the payout from your insurance company, the amount you’ll receive is the car’s ACV, minus your deductible. 

Contesting the ACV

If you’re unhappy with your payout, it’s possible to negotiate the ACV determined by your insurance provider. The insurance company typically seeks to pay as little as possible, so you may run into undervaluation of your vehicle. 

The best way to contest ACV is to look online at third-party valuations for your car’s make, model, year and condition. Kelley Blue Book and Edmunds are reputable sites that can give you a good sense of what your car’s ACV should be. Bring that information to your insurance company during the negotiation process. 

What to do when your car is stolen

If your car gets stolen, and you have comprehensive insurance, don’t panic. Here are the steps you can take to help resolve the situation:

File a report with the police

When you realize the car has been stolen, contact the police right away to file a report. You will need to provide insurance with a copy of the police report in order to file a claim with your insurance provider. You’ll be asked to provide some information, including:

  • Vehicle’s make, model and year
  • VIN and license plate number
  • Time and place the theft occurred
  • Unique car features, like dents or bumper stickers 

File a claim with your insurance provider

The next step is to file a claim with your insurance company. You’ll be asked to fill out forms and submit paperwork such as the following:

  • Vehicle title
  • Names of everyone who has access to the car
  • Thorough description of the vehicle
  • Mileage, service records, and upgrades made to the vehicle
  • Personal items that were left in the vehicle
  • Loan or leasing information 

If you have an active car loan or lease, make sure to notify your lender or lessor as soon as possible. 

What if your car is recovered?

If the police are able to find your stolen car and give it back to you, that’s typically an immediate relief. But it’s important to know that your car may have sustained damage or is missing parts, like a sound system. Here’s how that is addressed by insurance.

If your car is recovered while the theft claim is open, contact your insurer as soon as possible. Your insurer will send an adjuster to assess the damage and decide the cost of repairs and whether or not it’s worth repairing. 

The loss thresholds are state mandated, so contesting the determination is not really an option. If the insurance company agrees to compensate you for the repairs, your comprehensive coverage will cover the cost of repairs, minus your deductible. If the car is declared a total loss, you’ll be compensated for the ACV of your car.

If your car is recovered after the claim is closed, it’s a different story. Because you’ve already been paid for the loss, the car technically belongs to the insurance company and the title is no longer in your name. If you haven’t purchased a new car, you might be able to buy back the stolen vehicle, but it’s not guaranteed.

The takeaway

  • Comprehensive car insurance covers vehicle theft and damage related to break-ins but standard liability coverage does not.
  • If your car is stolen, your payout will reflect the actual cash value of your car.
  • After you notice the car is missing, make sure to call the police, file a report and open a claim with your insurance company.

If you have comprehensive car insurance, good news—a stolen car is covered. You’ll be compensated for the actual cash value (ACV) of your vehicle, minus your deductible, to replace it. If you’re unhappy with the car’s proposed ACV, check out Kelley Blue Book or Edmunds to get a sense of what the car might be worth and look into the possibility of contesting the valuation

As soon as you realize that your car is missing, call the police and then your insurance company. You’ll be asked to provide information and submit paperwork about the car and the incident. If the car is leased or you have a loan, make sure to contact your lender or lessor as soon as possible.

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