How does car theft affect insurance premiums?

Do you know that the United States experienced an alarming surge in car thefts in the preceding year, surpassing the unsettling number of over 1 million incidents? The repercussions of car theft extend beyond the immediate loss of a vehicle.

One significant consequence for victims is the subsequent impact on auto insurance premiums. How does car theft affect insurance premiums? This guide explains the reasons behind the surge in auto insurance costs following a vehicle theft and provides insights into what you can anticipate.

How does car theft affect auto insurance premiums?

Car theft doesn’t always lead to a significant increase in insurance premiums; specific circumstances trigger such changes. Filing a claim through comprehensive coverage, especially with a history of multiple claims, may result in a slight rate hike. Basic liability coverage, excluding theft, keeps rates stable but requires covering the replacement cost independently.

Consider the financial impact before worrying about a rate increase. Depending on the stolen vehicle’s value, incremental premiums might be more favorable than shouldering the replacement expense alone. Notably, accidents and moving violations generally affect rates more than theft incidents.

Comprehensive coverage, protecting against car theft, evaluates factors like local theft rates, vehicle make and model, and attractiveness to thieves. Insurers use this data to adjust premiums accordingly, highlighting the importance of personalized risk assessments based on individual circumstances.

Will auto insurance premiums go up after theft?

If you file a theft claim under your auto insurance policy and have coverage for theft or damage, your premiums will likely rise. The insurance company is responsible for covering the claim, and as there’s no external party to share the costs, the impact is felt through increased premiums.

Furthermore, any claims made during the policy period can negate the No Claim Bonus (NCB) earned. Losing out on this discount leads to an increase in the premium amount. However, your auto insurance rates will remain unaffected if your policy only provides basic liability coverage.

Certain insurers may introduce specialized programs to curb stolen vehicle claims through anti-theft technology. Preventive measures like installing a car alarm post-theft can reduce future insurance rates. Exploring these options and considering proactive steps after a theft incident can play a role in managing and mitigating the impact on your auto insurance premiums.

If you are looking for good car insurance, you can use Beem to find the best insurance quotes to help you make the right choice.

Understanding Insurance and Car Theft

Understanding the complexities of insurance in the context of car theft provides valuable insights for policyholders. When a vehicle is stolen, the implications for insurance can vary based on coverage and circumstances. Here are some things that you need to know: 

Is basic auto insurance coverage enough to protect against theft?

Basic auto insurance coverage, typically known as liability insurance, is designed to cover third-party injuries and property damage for which you are legally responsible. Unfortunately, basic coverage does not protect against theft or damage to your vehicle. To ensure coverage for replacing a stolen or attempted theft-damaged vehicle, augmenting your policy with optional comprehensive car insurance, all perils, or specified perils coverage, is imperative. These additional coverages extend protection to specific losses that go beyond what is covered by collision coverage.

Comprehensive insurance

Comprehensive insurance covers a range of non-collision incidents. This includes theft, vandalism, natural disasters, and other unforeseen events. If protecting your vehicle against theft is a priority, opting for comprehensive coverage is essential. While basic coverage is a legal requirement in many places and provides essential protection, it is insufficient if you want coverage for theft or other non-collision incidents. 

Understanding the high-risk vehicles

High-risk vehicles typically exhibit characteristics that increase the likelihood of accidents, theft, or costly damage. Some cars are more at risk, and The Equite Association’s latest Vehicle Theft Trend Report provides insights into the most targeted vehicle models, prompting increased insurance premiums for owners of these cars: 

Understanding the above data helps insurance providers and vehicle owners make informed decisions. Insurance companies use this information to set premiums on the basis of perceived risk when insuring a particular vehicle. 

How does the insurance company determine the value of a stolen vehicle?

Insurance companies use a number of ways to determine the value of a stolen vehicle, aiming to provide fair compensation to policyholders. Car insurance companies typically employ the standard process of Actual Cash Value (ACV). ACV represents the car’s depreciated value, considering age, mileage, and overall condition. This valuation method aims to determine what the vehicle is worth during the theft.

While the calculation of ACV can be intricate, insurance companies often collaborate with third-party entities to arrive at a fair and accurate assessment of the stolen car’s value. Policyholders need to be proactive and provide relevant information to support the accurate valuation of their stolen vehicle. This may include maintaining records of maintenance and improvements, having detailed photos of the vehicle, and reporting the theft to the police and the insurance company promptly.

Does auto insurance cover theft of personal items from your car?

Your auto insurance does not extend coverage to personal items stolen from your vehicle, including laptops, briefcases, or cell phones. However, if you have a renters’ or homeowners’ insurance policy, there may be coverage for personal belongings taken from your car, even if the theft occurred outside your property. Additionally, electronic device insurance is another option, specifically for stolen cell phones, laptops, and other devices you choose to include. It’s essential to review the specifics of each insurance policy to understand how coverage applies to personal items in different scenarios.

Does liability insurance cover for a stolen car?

Liability insurance, a mandatory component of auto insurance in many places, does not cover the theft of your vehicle. Liability insurance is designed to cover the costs associated with injuries or property damage that you, as the policyholder, may cause to others in an at-fault accident. If your car is stolen, you must have comprehensive coverage in your auto insurance policy to protect against theft.

What to do if your car is recovered after you buy a new one?

If your stolen car is recovered after purchasing a new one, immediately inform your insurance company about the recovery and assess the condition of the recovered vehicle. Review your insurance policy, notify the dealership or lender if applicable, and consult with your insurance agent to understand the coverage implications. 

In addition, consider options like keeping both vehicles, returning the new car, or selling/trading the recovered one. Understand the financial implications and update all relevant documents. Seek legal advice if needed and view the experience as an opportunity to enhance your insurance coverage and security measures. Every situation is unique, so tailor your actions based on the specifics of your case.

Why is car theft on the rise?

The surge in car thefts is influenced by various factors, with a notable contributor being the rise in thefts of specific Kia and Hyundai models. These vehicles, spanning the 2011 to 2022 model years, lack an engine immobilizer, a standard anti-theft device preventing unauthorized starting. With up to 9 million of these cars on the road, they have become prime targets, primarily fueled by viral social media videos showcasing how easily they can be stolen using minimal tools like a USB cable. While these videos have exacerbated the trend, it’s crucial to acknowledge that motor vehicle theft was rising even before their circulation.

In addition, the overall car theft landscape is alarming, with approximately one motor vehicle stolen every 32 seconds, culminating in over 1 million stolen vehicles in the past year. NICB data identifies full-size Chevrolet and Ford pickup trucks as the most frequently stolen vehicles in 2022, followed by popular models like the Honda Accord, Honda Civic, and Hyundai/Kia offerings. This trend underscores the need for heightened awareness and security measures to curb car theft rates.

What are the immediate actions to take after the car theft?

Experiencing a car theft is undoubtedly distressing, but taking immediate action can help navigate the situation more effectively. Here are the key steps to consider:

1. Contact the Police: Report the theft to the local police immediately. Provide them with all necessary details, including the make, model, color, and any distinguishing features of your vehicle. Obtain a copy of the police report for your records.
2. Notify Your Insurance Company: Contact your auto insurance company immediately to report the theft. Provide them with the police report details and any other information they may request. Be prepared to provide your policy number and other relevant details.
3. Provide Vehicle Information: Furnish your insurance company with essential information about your vehicle, such as the Vehicle Identification Number (VIN), license plate number, and any unique features or modifications.
4. Coordinate with Law Enforcement: Work closely with the police during their investigation. Provide any additional information they may need and inquire about the case’s progress.
5. Notify the Department of Motor Vehicles (DMV): Report the theft to the Department of Motor Vehicles. This step is essential for preventing potential legal issues if the thief uses your vehicle for criminal activities.
6. Inform Lenders or Financiers: If your car is financed, inform the lending institution or auto loan provider about the theft. They may have specific procedures or requirements to follow.
7. Cancel or Suspend Services: If your vehicle has electronic toll collection devices, parking permits, or similar services, contact the respective service providers to suspend or cancel these services associated with your stolen vehicle.
8. Take Note of Personal Items: List any personal items in the vehicle at the time of the theft. While auto insurance typically doesn’t cover personal belongings, this information may be helpful for other claims you may need to file.
9. Explore Surveillance Footage: If your vehicle was parked in an area with surveillance cameras, check with nearby businesses or authorities to see if there is footage that might aid in identifying the thief.
10. Stay Informed: Keep yourself informed about the progress of the police investigation and any updates from your insurance company. Follow up regularly to ensure all necessary steps are being taken.

Acting swiftly and providing accurate information to authorities and your insurance company is crucial for a smoother resolution of the car theft case.

Conclusion

So, how does car theft affect insurance premiums? In summary, car theft can impact insurance premiums, with a likely increase if a comprehensive claim is filed. Basic liability coverage remains unaffected, but coverage for the stolen vehicle is absent. Policyholders should weigh the financial considerations before making a claim and explore preventive measures for future rate considerations. Understanding this situation empowers individuals to make informed decisions in managing potential insurance premium changes.

Also, it helps to remember that auto insurance with Beem covers damage to your vehicle, other vehicles or property, and injuries to yourself or others. 

FAQs