Does Liability Insurance Cover Theft: Everything You Need to Know

Despite many high-tech automotive advancements, crime in many U.S. cities is still a concern.

Most states require vehicle owners to carry a minimum amount of car insurance coverage, which typically includes personal liability insurance. This policy covers the other driver’s losses when you cause an accident.

Liability insurance doesn’t provide any protection for you or your vehicle, and that includes theft. While liability insurance doesn’t cover vehicle theft, there are some policie

s that do.

What Is Liability Insurance?

When you cause an accident, personal liability insurance covers the other person’s bodily injuries and property damages. It also covers your legal fees and court costs if you get sued. Personal liability insurance is a legal requirement in most states, with minimum coverage limits varying by location. Review your state’s minimum insurance requirements to make sure you have adequate coverage.

How Does Liability Insurance Work?

If you injure a person in a car accident, your liability insurance will cover the claim they file against you. In this case, the bodily injury liability coverage within your insurance policy pays for the other person’s medical bills. It may also cover any loss of income resulting from their recovery.

Property damage liability is another coverage type under your liability car insurance. It covers the other person’s vehicle repairs or other property damage repairs. For example, you accidentally back into someone’s fence and knock over several posts, your property damage liability insurance would cover the cost.

Does Liability Insurance Cover Theft?

Unfortunately, liability insurance does not cover theft, and you can’t add theft coverage to your liability insurance policy. This insurance type only covers damages to other people and their property; it does not cover any theft or damages to your vehicle.

You may not use your property damage liability coverage to file a claim if someone steals your car or personal items from inside it.

How Do Insurance Companies Define Theft?

Car theft is not limited to a stolen automobile and can include vandalism or damages from theft. Take a look at the following scenarios to better understand what your insurance company considers theft:

Break-Ins

This situation involves someone breaking into your vehicle and damaging it without driving it away. The destruction may look like a smashed window or busted door lock from thieves trying to break in. In addition to a break-in, the thief may damage your car’s ignition system by trying to jumpstart it without a key. Typically, an auto repair shop can fix or replace these damaged elements.

Vandalism

Someone may vandalize your car by deliberately scratching it with a key or spray-painting graffiti. Vandalism can also include slashing your tires. These actions constitute vandalism since the thief intentionally damages or defaces your vehicle.

Stolen Parts

Thieves may steal parts from a vehicle to sell them for extra cash. Some of these parts are valuable, such as catalytic converters. It’s a part that’s often forgotten since it exists within your car’s exhaust system, but it’s important because it cleans engine emissions. Sadly, there’s a spike in catalytic converter theft across the United States. Check that your insurance policy covers this type of theft.

Theft of Personal Items

If your car is stolen with personal items inside, like a cell phone or sporting equipment, it’s not usually covered by car insurance. In most cases, only your home insurance or renters insurance policy would pay to replace your belongings, even if the car is never recovered.

Stolen Vehicle

The worst type of car theft is when your vehicle is actually stolen. Imagine you parked your car in the same spot you always do, on the street where you live. The following day, you come out to the spot to find a pile of broken glass and no vehicle in sight. Someone has stolen your car. What do you do now? Depending on your insurance coverage, your provider may help you replace it.

Which Type of Insurance Covers Theft?

It’s best to protect yourself, your car, and your belongings in case of theft. Although liability insurance doesn’t cover theft, other coverage options can help. Consider adding these types of coverage to your car insurance policy. You can also increase the limits or reduce the deductible to get more reimbursement.

Comprehensive Coverage

If your car gets stolen, only comprehensive coverage will cover it. When you file a car theft claim, your insurance provider will issue a reimbursement for the car’s current value minus your deductible. You can use this money to purchase a new vehicle. Even if the police recover your stolen vehicle, comprehensive coverage helps pay for any damages done to your car due to the theft.

Custom Parts and Equipment Coverage

If you have modified your vehicle with aftermarket or custom parts, you may want to protect them with custom parts and equipment (CPE) coverage. You should know that most auto insurance policies don’t cover these modifications if they need repairs or replacing. However, you may add CPE coverage to your current policy (if your insurer offers it) to protect these parts against theft.

Renters Insurance or Homeowners Insurance

Unfortunately, a comprehensive insurance policy does not cover theft of personal belongings. But if you have homeowners insurance or renters insurance, these policies will pay to replace your stolen personal items.

For instance, say you left your laptop in your car overnight. The next morning, you wake up and find a smashed rear window, and your laptop is gone. What’s the solution? You can file a stolen property claim with your renters or homeowners insurance to receive a payout to replace it. However, keep in mind that property insurance policies often have low coverage limits for valuable items, like electronics or jewelry.

What to Do If Someone Steals Your Car

It’s stressful to deal with a stolen car. You may feel lost trying to retrace what happened that day or struggle to remember the things you left inside your vehicle. The following steps should help prepare you for this unlucky event:

1. File a Police Report

Before calling the police, take a moment to rule out any possibilities. Was your car towed? Did you forget where you parked it? Did you owe money on it, and your lender repossessed it? If the answers are no and someone has stolen your vehicle, call the police to file a report.

It’s best to find a safe place to make this call so you can collect your thoughts and provide the necessary information for the report. Prepare to answer questions about the stolen car’s year, make and model, VIN, license plate numbers, and color.

The more information you provide regarding the incident, the higher the chances that the police will recover it. According to the National Insurance Crime Bureau, 35% of recovered stolen vehicles are found on the same day of the theft and 45% within two days.

2. File an Insurance Claim

Contact your auto insurance company immediately after contacting the police. Your insurance agent will likely need the details of the filed police report to process your claim. From there, they can determine which coverage type to use and what steps to take to repay you for your loss.

The following steps depend on whether the authorities recover your vehicle. If it’s recovered but damaged, your comprehensive insurance covers the repair expenses. If you never recover your vehicle, this insurance coverage pays you to replace it. Remember, your insurer pays you for repairs or replacement after applying your insurance deductible to the payout amount.

3. Contact Your Auto Lender

If you had a lease on your stolen car, you must contact your lender after contacting your insurance company. Most likely, when you signed your lease, the lender required you to have comprehensive coverage to protect the vehicle. This coverage also protects the lender because they are the rightful owner of the stolen vehicle.

Report your car as stolen to your leasing company and instruct them to contact your insurance provider directly. They will work together to resolve the issue. If you have positive equity in the vehicle, your insurance coverage should take care of the remaining balance of your lease up to the actual cash value of the car, less your comprehensive coverage deductible.

4. Have Professionals Inspect Your Recovered Car

If the police are able to recover your vehicle, you can keep driving it. But before you do, take your car to a reputable auto repair shop to have a professional take a closer look. Theft damage, such as scratches, flat tires, or broken windows, may be visible. However, there could be internal damage, such as a missing catalytic converter.

Once it’s recovered, schedule the soonest appointment for your car at your local auto body shop. Ask your insurance agent for suggestions if you’re unsure where to go. The repair shop’s service technician can then contact your insurer with an itemized bill detailing the repairs your vehicle needs. If you have comprehensive coverage, your insurance provider will cover these expenses minus your deductible.

For example, a service technician assesses your vehicle’s damage and calculates a repair cost of $1,000. Your comprehensive insurance covers these expenses, but you have a $250 deductible. Your insurance carrier will deduct this amount and pay the repair shop $750. You’re responsible for paying the repair shop the outstanding balance of $250.

5. Use Your Reimbursement Check to Buy a New Car

The worst-case scenario with car theft is that you never recover your car. You will likely need a replacement if you rely on your vehicle to commute to school or work. That’s why it’s essential to have comprehensive insurance.

Your insurance provider will calculate your car’s actual cash value (ACV) to determine your payout amount. The ACV equals your car’s worth before the loss and includes any depreciation, such as age or wear and tear. If your vehicle is worth $7,000 and you have a $500 deductible, your insurer will send you a check for $6,500. You can then use this payout for a down payment on a new car or lease a car as a temporary option.

How to Prevent Theft

Even though car theft seems unavoidable, it’s still a good idea to take preventative measures to protect yourself and your belongings. Here are a few ways to prevent theft:

  • Remove valuables or personal items you don’t want someone to steal from your car.
  • Keep a log of receipts and pictures of your most valuable items if you need this information to file a stolen property claim.
  • Park your vehicle in a well-lit area. If your car is clearly visible, thieves will be less likely to target it.
  • Deter thieves by installing an anti-theft device, such as a car alarm, in your vehicle.
  • Place a tracker in a hidden spot on your vehicle. If someone steals your car, you can work with the police to trace it.
  • Don’t leave your windows open. Be sure to fully close the windows before you leave your parked vehicle.

In the event of a car theft, comprehensive insurance will provide the best protection. Liability insurance only protects other people and their property from damages you cause.

Still, it’s important to maintain the right coverage on your auto policy to ensure you receive enough compensation for any damages or loss. It’s also wise to take extra steps to prevent theft from happening in the first place.

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