Is car theft covered by car insurance?

In 2020, over 800,000 vehicles were stolen in the U.S., according to the National Highway Traffic Safety Administration (NHTSA). 

Is car theft covered by car insurance? While car insurance does cover vehicle theft, this is only true if the owner has comprehensive coverage, which pays you up to the value of your vehicle, minus the deductible.

If you’re trying to determine how much car insurance you need, consider comprehensive to insure you against theft. And depending on your optional coverages, your stolen vehicle could be replaced with a new car of the same make and model. 

Keep reading to learn how car insurance covers theft and what coverage you need.

The Type of Insurance That Covers Theft

Does comprehensive cover theft? What is the difference between collision vs. comprehensive car insurance?

Comprehensive coverage is the only type of insurance that protects drivers from theft. If your vehicle is stolen, your insurance company pays you the vehicle’s value, minus the deductible. And you can then use the insurance payout to purchase a new vehicle. 

If only parts of your vehicle were stolen, for example, your tires or catalytic converter, comprehensive coverage pays for the cost of replacement as long as your deductible is lower than the cost of the parts that need to be replaced. It also covers the cost of vehicle damage resulting from extreme weather, fire, falling objects, and vandalism, including broken windows. 

Comprehensive coverage averages $12 a month, so adding it to your policy doesn’t significantly raise rates.

For more protection following their vehicle theft, drivers can add certain optional coverages to their insurance policies. 

• Gap insurance: Pays out the difference between the vehicle’s value and the remaining loan balance, minus the deductible. Learn more about how much gap insurance costs.
• New car replacement: Replaces the stolen or damaged vehicle purchased within a certain time period with a vehicle of the same make and model, regardless of the vehicle’s depreciated value. 

Now that you know which type of insurance covers vehicle theft, let’s take a look at which coverages don’t. 

Coverages that do not pay for car theft

The following car insurance coverages do not cover car theft:

• Liability coverage: Does liability insurance cover theft? No, liability pays for property damage and bodily injury for individuals other than the at-fault driver following an accident. 
• Collision coverage: Pays for property damage resulting from a collision with an animal or vehicle. 
• Roadside assistance: Pays for roadside emergency services, such as towing, jumpstarting, and fuel delivery. 
• Uninsured/underinsured motorist coverage: Pays for property damage and bodily injury after you have been hit by an uninsured or underinsured driver. 
• Personal injury protection: Pays for medical expenses for the driver and passengers following an accident. 
• Homeowners insurance: Covers damage to your home and liability or legal responsibility for bodily injury and property damage. 
• Renters insurance: Covers your personal belongings after damage resulting from certain disasters, including vandalism, theft, water, fire, smoke, and lightning, as well as liability protection for bodily injury or property damage and living expenses if your home is destroyed. 

Depending on your state, liability car insurance is required. However, the other abovementioned coverages are optional. 

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How Your Comprehensive Deductible Works

Here’s how your comprehensive deductible works if your vehicle is stolen and you need to file a car insurance claim.  

Let’s say your vehicle, which is worth $12,000, is stolen. You file a comprehensive claim with your insurance company and pay your $500 deductible, then your insurance company pays you $11,500, which is the value of the vehicle minus the deductible. 

As a result of depreciation, vehicles drop in value. Since the insurance companies pay you for the value of the vehicle at the time of the theft, you likely won’t get the amount you paid for the vehicle when you file a claim. This is where gap insurance and/or new car replacement come in handy. 

If you financed your vehicle for $19,000, and it is stolen when the value has dropped to $16,000, but you still owe $17,000 on the loan, gap insurance will pay the difference between the loan balance and the value of the vehicle.

So when you file a claim, you would pay the comprehensive deductible of $500, receive a payout of $15,500, and gap insurance would pick up the remaining $1,000 loan balance. 

New car replacement also saves you from the impact of depreciation because depending on when the vehicle was purchased, your insurance company will replace the stolen vehicle with a vehicle of the same make and model. 

Does full coverage cover theft? Full coverage car insurance includes comprehensive coverage, so if you have full coverage, theft is covered.

When You Should Purchase Comprehensive Coverage

Even though this coverage may not be part of state-required car insurance, here’s why you may want to consider purchasing comprehensive coverage. 

• The lender or dealership for your financed or leased vehicle requires you to carry comprehensive coverage. 
• The cost of comprehensive insurance and the deductible is less than the value of your vehicle, which determines the insurance payout if your vehicle is stolen. 
• Your vehicle is worth more than you could afford out of pocket. 
• You can afford comprehensive and collision (in many cases, both coverages must be purchased together).

Although comprehensive coverage can be a great addition to your car insurance policy, this type of coverage isn’t ideal for older vehicles with little to no value, especially if the payout would be equal to or less than the total cost of comprehensive coverage and the deductible combined.  

Car Insurance Doesn’t Cover Theft of Personal Property

As for the personal property inside your stolen vehicle, you’ll file a claim with your homeowners or renters insurance to have the cost of your personal items reimbursed. 

If you don’t have renters or homeowners insurance, consider adding it to your policy along with comprehensive. Many insurance companies offer discounts to customers who bundle insurance coverages. 

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What to Do If Your Car Is Stolen

When your vehicle is stolen, there are a few steps you want to follow. 

1. Contact the police. Contact the local police to file a report. You’ll provide your personal information and vehicle details, including color, make, model, year, VIN, and license plate number. 
2. Contact your car insurance company. Contact your car insurance company to confirm coverage and file a claim. You may be asked to provide a copy of the police report.
3. Contact your homeowners or renters insurance company. Contact your homeowners or renters insurance company to confirm coverage and provide details about the personal property you believe was inside the stolen vehicle. 

If you happen to locate your vehicle, contact the police immediately. 

How to Keep Your Car Safe

Keeping your vehicle safe is your responsibility. Your vehicle can be stolen anytime, but by taking action, you may be able to prevent vehicle theft. 

Here are a few things you can do to deter vehicle theft.

• Remove keys from the vehicle when exiting. 
• Close and lock windows and doors after exiting the vehicle. 
• Avoid leaving valuables inside the vehicle. 
• Avoid parking in dark or dimly lit areas. 
• Invest in anti-theft systems, such as steering-wheel locks, brake locks, theft deterrent decals, fuse cut-offs, kill switches, and GPS tracking systems. 

Vehicle owners can only do so much to prevent vehicle theft, which is why comprehensive insurance can act as the last line of defense by protecting you from the financial responsibility of having to replace your vehicle out of pocket. 

To reward policyholders who limit the potential for theft or accidental damage, many insurance companies offer an off-street parking car insurance discount to those who have access to secure, private parking. If you don’t want to pay out of pocket if your vehicle is stolen, consider adding comprehensive coverage to your policy to keep yourself protected. 

When Car Theft Is Covered by Car Insurance: The Bottom Line

Since most states only require liability, drivers may be under the impression that they are covered in all situations, but this isn’t true.

Does car insurance cover theft? Comprehensive insurance is the coverage you want if you specifically want financial protection against vehicle theft and damage resulting from fire, falling objects, vandalism, and extreme weather.

And, of course, there are other coverage options available to cover other scenarios, such as collision with another vehicle or roadside emergencies.  

If you are unsure about which types of insurance coverage or how much coverage you need, you can speak with your insurance agent. 

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