Does Full Coverage Car Insurance Cover Theft?
Demystify "full coverage" car insurance. Understand which specific policy component protects your vehicle from theft and the claim process.
Many people misunderstand “full coverage” car insurance, especially concerning vehicle theft. While the term suggests complete protection, “full coverage” is not a single policy. This article clarifies what “full coverage” entails and how car theft is protected under auto insurance.
Understanding “Full Coverage” and Theft Protection
“Full coverage” is not a distinct insurance product but rather a common term used to describe a combination of various types of auto insurance policies bundled together. This package typically includes liability coverage, which covers damages or injuries to other parties, and collision coverage, which covers damage to your own vehicle from an accident.
The protection against car theft comes specifically from comprehensive coverage, which is usually part of a “full coverage” package. Comprehensive coverage extends beyond collisions, covering non-accident related damages to your vehicle. This includes incidents such as vandalism, fire, natural disasters like hailstorms or floods, and damage from hitting an animal. Comprehensive coverage protects against financial losses if your car is stolen. It also applies if your car is damaged during an attempted theft or break-in, such as broken windows or damaged locks. Without comprehensive coverage, a standard liability-only or collision-only policy would not provide financial protection for a stolen vehicle.
Filing a Car Theft Claim
If your car is stolen, immediate action is necessary to facilitate the insurance claim process. The first step involves reporting the theft to the police department promptly. Provide a detailed description of your vehicle, including its make, model, year, color, and Vehicle Identification Number (VIN), for the police report. Obtain a copy of this official police report and report number, as insurers typically require it to process a theft claim.
After reporting to the police, contact your insurance provider without delay to notify them of the theft. Timely reporting is crucial, as some policies may have specific timeframes for reporting incidents. You will need to provide your policy number, the police report number, and all relevant vehicle information. If your vehicle is financed or leased, also inform the financing or leasing company about the theft.
The insurer may request additional documentation to support your claim, such as proof of ownership, vehicle maintenance records, or receipts for any aftermarket upgrades. Providing accurate and consistent information to both the police and your insurance company can help expedite the claims process.
Claim Settlement and Payout
Once a car theft claim is filed and processed, the settlement involves specific financial considerations. A deductible applies to comprehensive claims, representing the out-of-pocket amount you are responsible for before your insurance coverage begins to pay. Comprehensive deductibles commonly range from $100 to $2,000, with typical amounts often around $250 or $500. If the cost of repairing damages or the vehicle’s value is less than your chosen deductible, the insurer will not provide a payout, and you would bear the full cost.
The payout amount for a stolen vehicle is determined based on its Actual Cash Value (ACV) at the time of the theft, minus your deductible. ACV is calculated by taking the vehicle’s replacement cost and subtracting depreciation, which accounts for factors like age, mileage, and overall condition. This means the payout will reflect the car’s market value just before it was stolen, not its original purchase price or the cost of a brand-new replacement. Insurance companies utilize various valuation systems, sales data for comparable vehicles, and adjuster assessments to establish the ACV.
Should the stolen vehicle be recovered after you have already received a settlement from your insurer, the car typically becomes the property of the insurance company. They may then offer you the option to buy it back. If the vehicle is recovered during the ongoing claims process, the insurer will evaluate any damage sustained and cover the repair costs, or declare it a total loss and proceed with an ACV payout if repairs are not economically feasible.