Does Insurance Cover Vehicle Theft and What Are the Steps?
Understand if your car insurance covers vehicle theft, the essential steps to take, and how to successfully navigate the claim process.
Vehicle theft presents a significant concern for vehicle owners, potentially leading to substantial financial losses. Insurance policies are designed to mitigate these risks, offering a financial safety net in the event a vehicle is stolen. Understanding how different insurance coverages apply and the necessary steps to take after a theft can help policyholders effectively navigate a challenging situation.
Types of Coverage for Vehicle Theft
Vehicle theft is primarily covered under comprehensive insurance, which is an optional component of an auto insurance policy. This coverage protects against damages to your vehicle not caused by a collision, including incidents like fire, vandalism, natural disasters, and theft. Many lenders require comprehensive coverage if a vehicle is financed or leased to protect their investment.
Standard liability insurance, which is legally required in most jurisdictions, does not provide coverage for vehicle theft. Liability coverage solely addresses damages or injuries you might cause to other parties in an accident. Therefore, relying only on liability insurance leaves a vehicle owner without protection in the event of theft.
Collision coverage also does not extend to vehicle theft; its primary purpose is to cover repair or replacement costs for your vehicle following an accident with another vehicle or object.
Steps After Vehicle Theft
The first action after discovering vehicle theft is reporting the incident to law enforcement. A police report is necessary for any subsequent insurance claim, and obtaining a police report number is a key step. When reporting the theft, provide detailed information about the vehicle, including its make, model, year, Vehicle Identification Number (VIN), license plate number, color, and any unique identifying features.
Gathering personal vehicle documents, such as the title, registration, and recent service records, is also important. These documents will be necessary to verify ownership and provide context regarding the vehicle’s condition and maintenance history during the claims process.
After contacting the police and securing a report, notify your insurance provider as soon as possible. This initial notification alerts them to the incident and begins the preliminary process, though it is distinct from formally filing the claim.
Filing an Insurance Claim for Theft
After obtaining a police report, formally file the vehicle theft claim with your insurance company. This can be done through their online portal, a dedicated claims hotline, or by contacting your insurance agent directly.
The insurer will then initiate an investigation into the theft. This process often includes a waiting period, which can range from 30 to 60 days, to allow law enforcement time to recover the vehicle. During this period, the insurer may communicate with the police department and may also interview you to gather more details about the circumstances surrounding the theft.
A claims adjuster will be assigned to your case, responsible for assessing the details of the incident and determining the validity and value of your claim. The adjuster may request additional documentation to prove ownership and the vehicle’s condition prior to the theft.
Understanding Your Claim Settlement
When an insurance company settles a vehicle theft claim, the payout amount will be reduced by your deductible. The deductible is the out-of-pocket amount you agreed to pay before your comprehensive coverage begins to cover the remaining costs. For instance, if your vehicle is valued at $20,000 and you have a $500 deductible, the insurance payout would be $19,500.
For total loss due to theft, the insurance company will value the stolen vehicle based on its Actual Cash Value (ACV). ACV represents the vehicle’s market value at the time of the theft, accounting for depreciation and wear and tear. This differs from replacement cost, which would cover the expense of purchasing a brand-new vehicle of similar make and model.
If the vehicle is recovered after the claim has been paid, the insurance company takes ownership of the recovered vehicle. In some instances, the policyholder may have the option to buy back the vehicle from the insurer. Items stolen from inside the vehicle, such as electronics or personal belongings, are not covered by auto insurance but may be covered under a homeowner’s or renter’s insurance policy.