How does auto insurance help when your car is stolen?

Car thefts are on the rise in the US. According to data from the National Insurance Crime Bureau (NICB), more than one million cars were stolen in 2022. Thefts increased by 7% in 2022 compared to 2021, making last year one of the worst on record since 2008.

The NICB recommends that drivers check to make sure their car insurance policy is up to date, but don’t assume your policy will cover your stolen car. CNBC Select explains why you need comprehensive auto insurance to protect yourself from theft and what actions you should take if you find yourself the victim of a grand theft auto.

With the exception of New Hampshire and Virginia, all states require you to have an auto insurance policy to drive. But chances are you need more coverage than is legally required if you want to be reimbursed for your stolen car.

Most policies that meet the legal requirements offer some liability coverage, which is a type of insurance that can cover other people and property that are damaged when you are involved in an at-fault accident. In particular, this coverage does not cover any non-accident-related damage to your car, such as theft.

This is where full coverage comes into play. This type of coverage isn’t required by law, but it can help reimburse you if your car or parts are stolen, and even cover things like damage from natural disasters, vandalism, and dropped objects.

Comprehensive car insurance tends to be more expensive than other policies. You can save money by taking advantage of companies that offer discounts on their policies. One of CNBC Select’s top picks, Farmers Insurance makes coverage cheaper with 22 auto insurance discounts. You can earn these discounts through a variety of actions, including driving safely, signing up for paperless billing and more. Geico was also ranked as the best auto insurance company for affordable coverage and offers low average premiums for comprehensive coverage.

If you’re renting a car, you’ll want to pay with a credit card that offers primary car rental insurance coverage. This covers the theft of a rental car and allows you to submit the claim directly through your credit card insurance provider, without having to submit it to your own car insurance company first. For example, the Chase Sapphire Reserve offers primary rental insurance that covers up to $75,000 worth of damage caused by accident or theft for rentals of up to 31 consecutive days.

Here are the steps you should take if you discover a lot of broken glass where your car was parked.

• Report the crime to the police: Contact the police and file a report with them as soon as possible. Make sure you have details of the vehicle identification number (VIN), title information (if you have one) and any photos or additional information about the car that could help the authorities identify it.
• File a claim with your insurance company: You can start this process quickly online with almost all insurance companies. You will need a copy of the police report and a list of everything that was in the vehicle.
• Play the waiting game: After a claim is made, insurers usually have a 30-day waiting period to see if the car is located before a payment is made.

If the vehicle still hasn’t been found, you’ll likely receive a payment equal to the car’s actual cash value (ACV) minus your deductible (the amount you’re responsible for paying before insurance coverage kicks in) .

One important thing to keep in mind is that the AVC is not what you paid for the car. Rather, it’s a given replacement value (usually equal to what you’d pay to buy the same or similar model) minus the car’s depreciation.

It is possible to get coverage that would pay the price of a new vehicle, called new car replacement coverage, for an additional cost. While not all insurers offer this, some do for certain newer cars, such as Farmers, Nationwide and Allstate.

You should also keep in mind that items in your stolen car may not be covered by your auto insurance. However, these belongings may be under renter’s insurance or homeowner’s insurance. And if you bought any of these items with a credit card that offers purchase protection, you may be able to get money back on your card.

Even if you have comprehensive coverage, having your car stolen is not ideal. While comprehensive coverage can help you repair or replace a stolen vehicle, you’ll still have to pay the deductible. Taking steps to make sure your car isn’t tipped can help save you time and potential headaches.

Fortunately, there are several things you can do to prevent this. The NICB suggests parking in a garage or well-lit area. For those with cars parked in a driveway, the NICB also suggests investing in motion-detection lights to scare away would-be thieves.

A steering wheel lock bar can be locked to the steering wheel, preventing it from turning, and can be purchased for between $25 and $50.

Car thefts have increased significantly year on year. While you can take steps to prevent car theft, you must have comprehensive coverage if you want theft to be covered.