Does Car Insurance Cover Theft? All You Need to Know About Car Theft Insurance

Car theft remains a big concern for every vehicle owner. The National Insurance Crime Bureau reported that nearly 1 million vehicles were stolen across the United States in 2022 alone. Financially and emotionally, auto theft can be a stressful experience for those without insurance coverage.

This guide breaks down everything you need to know about car theft insurance to help you understand what’s covered, what’s not, and how you can protect yourself against this unfortunate event.

What Is Car Theft Insurance?

Car theft insurance is part of your comprehensive policy that covers your vehicle against loss or damage due to theft. Car insurance policies don’t automatically include theft; it usually comes under comprehensive coverage.

Types of Theft Covered

1. Full Theft (Entire Car Stolen): The most obvious scenario is when your car is completely stolen and not recovered. Comprehensive auto insurance usually covers the actual cash value (ACV) of your vehicle, minus your deductible. The deductible is the specific, pre-agreed amount you must pay out of pocket for a covered loss, as the insurer pays the rest.
2. Partial Theft (Theft of Car Parts): Thieves often target car parts, such as wheels, stereos, airbags, and catalytic converters. In such cases, comprehensive coverage pays for the replacement of these vital car parts if they’re stolen.
3. Break-ins: Sometimes thieves break into your car, cause property damage (e.g., broken windows), and steal personal property. In such cases, comprehensive coverage pays only for the repair of the vehicle. Other valuables inside the car aren’t covered by auto insurance.
4. Attempted Theft (Damage from a Thief’s Efforts): Sometimes, a thief may not succeed in stealing your vehicle. But they can damage your vehicle while trying to steal it. Such cases, like lock, window, or ignition damage, are covered under comprehensive coverage.

Knowing the various types of theft and damage helps you make a more accurate assessment of your insurance needs. It's important to keep in mind that comprehensive car insurance covers theft and damage to your vehicle, and not the damages or losses caused to other people in an accident where you're at fault. Read this ultimate guide to car insurance to understand the options that cover vehicle theft.

Does Car Insurance Cover Theft?

The simple answer is yes, but it depends on the type of car insurance policy you have. Here's how different types of car insurance policies address theft compared to a comprehensive auto policy.

Standard vs. Comprehensive Coverage

• Liability Insurance: This is the most basic form of car insurance and is generally the minimum required for licensed drivers in most states. Liability insurance only covers damage to other people and their property when you are at fault in an accident. It doesn't cover theft or vandalism.
• Collision Insurance: This covers damage to your car when you’re involved in a collision accident, regardless of who’s at fault. Similar to liability coverage, it doesn’t cover theft or vandalism.
• Comprehensive Insurance: This is the most important coverage you need for car theft. Comprehensive insurance can cover a wide range of non-collision events, including theft, vandalism, and natural disasters. If your car is stolen, comprehensive coverage will pay the loss, minus your deductible. Also, if your recovered car was damaged during the theft, it can help pay for repairs. Get free car insurance quotes from Think Save Retire for comprehensive coverage to protect your vehicle against theft.

Exclusions to Keep in Mind

While comprehensive coverage offers a significant level of protection against theft, there are some exclusions to be aware of:

• Unlocked Car: According to most insurance policies, keeping your car safe is your responsibility. If your car is stolen because you left it unlocked, your insurer may not cover the theft, depending on the policy.
• Keys Inside the Vehicle: Most insurance policies will not cover theft if you leave the keys inside the vehicle.
• Personal Belongings: Car insurance doesn’t cover personal items inside your car, such as laptops, phones, cash, other electronics, or bags. These items may be covered by renters' or car owners’ insurance instead.

What to Do if Your Car Is Stolen

When your vehicle is stolen, report it to the police immediately. Then, you should call your insurer to file a claim. Be prepared to provide a police report, proof of ownership, such as a car registration and an insurance policy, and information about the theft. In some cases, an insurer may take as long as 30 days to settle a claim while waiting for the authorities to recover the vehicle. For more insights on this, read our guide on what happens if your car were stolen and you didn't have auto insurance.

What Does Auto Insurance Cover in Case of a Break-In?

Break-ins are another common scenario that can leave you wondering if your auto insurance will cover the damage. A break-in typically involves thieves trying to steal your car or other valuables inside, and even if they don’t succeed, they often leave behind damage.

Coverage for Property Damages from Break-Ins

• Broken Windows: If thieves break into your car but don't manage to steal it, comprehensive coverage will generally cover the cost of repairs, including replacement of broken windows.
• Damaged Doors or Locks: If your car is broken into, auto insurance will cover the repair costs to restore it to its original state.
• Stolen Items Inside the Car: While your car insurance covers theft and damage, it doesn’t cover personal belongings stolen from the car. For instance, if somebody steals your laptop or phone from your car, you’ll have to pay for the losses out of pocket or get a different coverage under homeowners or renters insurance.

Filing a Claim for Break-Ins

If your car is broken into, it is important that you file your claim promptly. Most auto insurance companies will pay for repairs resulting from a break-in. However, if it takes a few days to report the incident, there may be complications with your claim.

What Happens if Only Car Parts Are Stolen?

Sometimes, thieves only steal parts of your vehicle, like wheels, airbags, or stereo systems. If such parts get stolen, you may wonder whether your car insurance policy covers a replacement.

Coverage for Stolen Car Parts

Comprehensive car insurance usually covers stolen car parts, provided the theft is reported and those parts are important for keeping your vehicle running. However, there are a few key things to consider:

• Aftermarket Parts: If your car has aftermarket parts, such as custom wheels or a high-end stereo system, they'll not be covered under standard comprehensive insurance.
• Parts Coverage Limits: Most insurance policies will cover the replacement of stolen parts based on the part’s depreciated value at the time the theft occurs.

Steps to Take When Parts Are Stolen

If your vehicle’s parts are stolen, report the theft immediately to both the police and your insurer. You’ll be required to show some documentation, such as the report from the police and proof of ownership, when filing the claim.

How to Protect Your Car from Theft

While car insurance can help cover the costs if your car is stolen, it's always better to avoid theft in the first place. Here are a few tips that can lower the risk:

• Park in Well-Lit Areas: Thieves are less likely to target visible, well-lit areas.
• Use Anti-Theft Devices: Use anti-theft devices, such as steering wheel locks, alarms, and GPS tracking systems.
• Lock Your Car: Always lock your car whenever you’re away from it, and don’t leave valuables inside the vehicle.

What to Do After a Car Theft or a Break-In

If your car is stolen or broken into, here's what you should do:

1. File a Report: Notify the police immediately to begin the investigation.
2. Contact Your Insurance Provider: Submit a claim to your insurance company, along with all the relevant documentation.
3. Document the Scene: Take photos of any damage and list any stolen items to support your claim.

Frequently Asked Questions

Does Auto Insurance Cover Stolen Rental Cars?

Yes, your personal car insurance covers stolen rental cars if you have the right type of policy. Comprehensive car insurance might cover a stolen rental vehicle in the same way as it covers your own car. You should also check with the rental company since they often offer additional coverage for rental vehicles. If you don't have comprehensive auto insurance, your insurer won't pay for theft.

What Happens if Your Car Is Stolen and You Still Owe Money?

If your car is stolen and you still owe money, you may be left with an outstanding loan balance even after your insurance pays out. Your insurance company will typically reimburse you for the car's actual cash value (ACV), minus your deductible if you have comprehensive coverage. However, if the ACV is less than what you owe to the finance or leasing company, you must pay the remaining balance. Consider gap insurance to protect yourself against this risk. Gap insurance covers the difference between the ACV and the amount you owe.

How Do I Prove Car Theft for Insurance?

You need to file a police report right after your car has been stolen to substantiate your claim for auto theft insurance. The insurer will want to see this police report when you put in your claim. You may be asked to show evidence of ownership, such as your vehicle’s registration, title, and any supplementary documents supporting your claim. It’s also helpful to include photos of the car and any distinctive features or custom parts that may help identify it.

What Is the 21-Day Rule for Insurance?

The 21-day rule refers to the usual waiting period that most insurance companies would consider settling a claim in the event of a stolen vehicle. Most insurers would wait 21 days from the date of the theft to see whether the car turns up. At the end of this period, if the car isn’t found, they will pay out based on the vehicle's actual cash value. However, the time may vary depending on the insurer and your policy particulars. Read our guide on the best car and auto insurance for insights on claims and waiting periods.

How Long Does an Insurance Claim Take for Vehicle Theft?

In most cases, if you make a claim, they will begin their process, which may then take as long as 30 days to pay the claim. This period provides enough time for the authorities to try to recover the stolen vehicle and the insurance company to get all the required documentation. If the car has not been recovered within this time, the insurer is likely to reimburse, depending on the depreciated value of the car. However, the process can be quicker when the vehicle is recovered sooner or if you provide the required documentation promptly.

Conclusion: So, Does Auto Insurance Cover Theft?

With the right coverage, such as comprehensive auto insurance, you can protect yourself from the financial burden of a stolen car or break-in. However, you need to understand the level of coverage car theft insurance is essential for any vehicle owner.

Think Save Retire offers valuable insurance resources to help you learn more about the options for auto insurance and how to protect your vehicle. Always review your insurance policy to ensure it provides the coverage limits you need, and consider taking preventive measures to reduce the risk of theft.