Car Insurance: Does it Cover Theft?

Nearly 750,000 cars were stolen in the United States in 2018. This might sound like an extremely high number, but your chance of having a car stolen is still just 0.23%. Regardless, getting a theft insurance plan for your car is a necessity if you plan to drive in the U.S.

Does car insurance cover theft? The answer is both yes and no, depending on what exactly is stolen. We’ll go over what types of theft are covered by your auto insurance policy and how to make sure all your belongings are sufficiently insured in case they’re stolen.

Does car insurance cover a stolen car?

Whether or not your car insurance covers theft depends on what type of policy you have with your insurance provider. Theft insurance for stolen cars falls under the comprehensive insurance part of your auto insurance policy.

Comprehensive coverage includes types of damage that aren’t caused by a collision, like vandalism, fire and natural disasters. Theft of your vehicle falls into this category. If your car is stolen, your insurance provider will pay for a new one up to your comprehensive coverage limit, which is why it’s important to make sure that the limit on your policy covers the full cash value of your vehicle.

However, even if your policy limit is high enough to replace a stolen car, you’ll still be responsible for paying your deductible.

Whether or not you have comprehensive coverage to replace a stolen vehicle depends on your policy. This type of auto insurance isn’t legally required by any state; many only require you to carry bodily injury and property damage liability.

If you have financing on your vehicle, though, it’s likely that the lender requires proof of comprehensive insurance. Even if you own your vehicle outright, you might still want to carry comprehensive coverage. Theft insurance is much more affordable than being out of pocket for the full cost of a new vehicle.

Does car insurance cover theft of personal items?

Some drivers assume that if their auto insurance policy covers a stolen car, it will cover everything in the car that was stolen too. Unfortunately, this isn’t usually the case.

Believe it or not, the best way to insure personal items from theft – even if they’re stolen from your car – is through a homeowners or renters insurance policy.

Personal property coverage is a part of your property insurance policy that covers the cost of replacing your belongings both in and out of your home. There are two options for calculating personal property coverage: actual cash value, which covers the cost of the items at the time they are stolen (taking depreciation into consideration), and replacement cost coverage, which covers the cost of purchasing entirely new items of the same quality (without taking depreciation into consideration).

All homeowners and renters insurance policies set a limit on personal property coverage that might not pay for some high-value items like fine jewelry or high-end electronics. Consider purchasing additional coverage for items that wouldn’t be fully paid for if they were stolen from your car. This is called scheduled personal property coverage and can usually be added easily to your property insurance policy.

If you rent your home, personal property coverage included in the landlord’s insurance policy won’t cover your items. You’ll need a separate renters insurance policy if you want theft insurance for the personal items in your vehicle.

What do you do if your car is stolen?

If your car is stolen, try not to panic. Instead, take swift action to minimize the impact and protect your finances. Follow these steps to begin an insurance claim and start the process of recouping the cost of your car and personal property.

  1. Contact your property insurer: If personal items were stolen with your vehicle, you should first see what – if any – will be covered by your auto insurance policy. Then, let your homeowners or renters insurance policy cover the rest. This will involve filing a separate claim with your property insurer. However, if you’ve bundled property and auto policies through the same provider, this process may be streamlined.
  2. File a police report As soon as you’ve discovered your vehicle was stolen, call the police to report the theft. Provide identifying information such as the make, model, color and license plate number. If your car (or any personal item left in the car, such as a smartphone) has a GPS tracking system, provide that information as well.
  3. Make a list of the items in your car: While your memory is still fresh, write down everything that was left in your vehicle at the time that it was stolen. For high-value items like laptops or other electronics, gather as much documentation as possible, such as original receipts and/or serial numbers of the devices.
  4. File an auto insurance claim: Be prepared with several documents to claim a stolen vehicle. Most auto insurers won’t accept a claim involving theft without a police report. You’ll also need to include a list of the personal items that were in the car when it was stolen. Some insurers will also want to know who had access to the car and where any extra copies of the keys were kept.

The bottom line

Does car insurance cover theft? It depends. Make sure you have comprehensive coverage against theft of your vehicle with a limit high enough to cover the car’s value. Then, check with your homeowners or renters insurance provider to check that you have theft insurance for your personal items. Between these two policies, you can rest assured that you’ll be financially protected if your car is stolen.