Does Liability Insurance Cover a Stolen Car?
Uncover whether liability insurance protects your car from theft. Learn which coverage does and what steps to take if your vehicle is stolen.
When a vehicle disappears unexpectedly, a common question arises regarding insurance coverage, specifically whether a standard liability policy offers protection for such an event. Understanding the distinctions between various types of auto insurance is fundamental to addressing this concern. The purpose of this discussion is to delineate the scope of liability insurance concerning stolen vehicles and to outline the appropriate actions one should take if their car is stolen.
What Liability Insurance Covers
Liability insurance serves as a foundational component of auto insurance, primarily designed to protect a policyholder financially if they are found responsible for causing an accident. This coverage addresses damages and injuries sustained by other individuals or their property, rather than covering the policyholder’s own losses. Most jurisdictions mandate that drivers carry a minimum amount of liability insurance to operate a vehicle legally.
This type of insurance is divided into two main categories: bodily injury liability and property damage liability. Bodily injury liability coverage helps pay for medical expenses, lost wages, and legal fees for others injured in an accident where the policyholder is at fault. Property damage liability covers the costs to repair or replace another person’s vehicle or property, such as a fence or building, that was damaged in an at-fault incident.
Liability insurance explicitly does not cover damage to the policyholder’s own vehicle or personal injuries. This exclusion extends to losses resulting from theft, vandalism, natural disasters, or other non-collision events. A liability-only policy will not provide financial compensation if a car is stolen.
How Stolen Cars Are Covered
Protection against vehicle theft falls under a different type of auto insurance known as comprehensive coverage. This coverage is specifically designed to address damage to a policyholder’s vehicle that occurs from incidents other than collisions. Such events include theft, vandalism, fire, natural disasters like floods or hail, falling objects, and impacts with animals.
Comprehensive coverage is optional and not required by law, unlike liability insurance. However, if a vehicle is financed or leased, lenders often require comprehensive coverage to protect their investment. When a car is stolen, comprehensive coverage can help reimburse the owner for the vehicle’s actual cash value (ACV) at the time of the theft, minus any applicable deductible.
If a stolen vehicle is recovered with damage, comprehensive coverage applies to repair costs, subject to the policy’s deductible. The deductible is the out-of-pocket amount the policyholder must pay before the insurance coverage begins. For personal items stolen from inside the vehicle, auto comprehensive insurance does not cover these, but a homeowner’s or renter’s insurance policy might provide coverage.
Actions to Take When Your Car Is Stolen
Discovering a car has been stolen requires immediate action to aid recovery and insurance claims. The first step is to report the theft to the local police department immediately. Providing specific details such as the vehicle identification number (VIN), license plate number, make, model, color, and any unique features of the car is important for the police report.
After filing the police report, obtain a copy or the report number for your insurance claim. Subsequently, contact your insurance company to report the theft. Be prepared to provide them with your policy number, vehicle details, and the police report information.
Notify any lienholder, such as a bank or financing company, if the car is not fully owned. Lienholders have a financial interest in the vehicle and often require notification of theft to protect their stake and can assist in expediting the insurance process. Contact your state’s Department of Motor Vehicles (DMV) to report the vehicle as stolen; this helps prevent fraudulent activity associated with the vehicle’s registration or title.
Following the initial reports, the insurance company will initiate an investigation and may impose a waiting period, around 30 days, before issuing a payout. This period allows time for law enforcement to recover the vehicle. If the car is not recovered within this timeframe, or if it is recovered but deemed a total loss, the insurer will proceed with the claim payout based on the vehicle’s actual cash value at the time of theft, less your deductible.