Driving a car is always a risky thing, especially considering that there are over six million passenger car accidents in the US, and the number is rising. The odds of you getting in a car accident are very high, and getting in an accident and making an insurance claim will hike your insurance rates.
But what about something quite rare (at least in most parts of the country)? What happens if your car is stolen? Is there an insurance policy that will cover car theft? And if yes, how does car theft affect insurance premiums? Let’s take a look.
The Right Car Insurance for Theft
Not all car insurance policies cover theft. If you are unaware of auto insurance policies, you might not even have a policy that covers theft. Most states require you to carry liability coverage to legally drive a car. Without it, not only can you get in legal trouble, but might end up paying hundreds of thousands of dollars.
Then some states require you to get a personal injury protection plan that covers the cost of medical treatments and lost wages after the accident. You are also required to have uninsured motorist coverage.
If you live in a state where all these three car insurance policies are mandatory, the cost of getting these policies could go very high. If you want to save money on auto insurance policies, make sure you compare multiple car insurers and their coverage in your state.
For example, if you live in Wisconsin, then look for the best and most affordable auto insurance in Wisconsin and compare all the options, selecting the best one for your budget. Make sure you consider the price as well as the coverage too. You must put equal importance on coverage and affordability.
Optional Coverage
After spending hundreds of dollars on auto insurance policies that are mandatory to have, some people might skip the optional car insurance policies. This could be a problem as theft coverage comes under an optional coverage that many people skip buying.
Comprehensive coverage is the auto insurance policy that covers the cost of repairs if your car is damaged due to natural disasters such as floods, earthquakes, fires, hailstorms, hurricanes, etc. All these events are rare but can lead to your car getting totaled.
Comprehensive coverage also covers damages due to projectiles, riots, vandalism, etc. It also covers theft, which is the topic of this article. In case your car is stolen, you can claim your comprehensive insurance and get the actual cash value of the car.
The actual cash value of a car is the current market value. It is not the price you paid when you bought the car. The ACV is negotiable, meaning that you can talk to your insurer if they are undervaluing the car.
Car Theft and Insurance Premiums
So in case your car gets stolen, does that increase your insurance premium rates? Just like if you get in a car accident and make an insurance claim, your insurance rates bump up. This is because you become a high-risk individual for the insurance company, and insurance claims cause loss to the company as well.
So to offset further chances of a claim and losses, the insurance company hikes the price. This applies to comprehensive insurance as well. If your car is stolen, and you claim your comprehensive coverage, your insurance premium rates as well as your premium rates will increase.
This price hike will not apply to all of your car insurance policies. If your car is stolen, the premium rates for liability and collision insurance do not change, along with uninsured motorist coverage and a personal injury protection plan. Only the rates for comprehensive coverage will increase.
How much will the increment be? This depends on the insurance company and the state you live in. Expect anywhere between 5% to 15%. Do note that to claim your policy, you’ll have to get a proper police report about the theft, so report the theft as soon as it happens.
Does Changing Car Insurance Company Help?
You might be thinking that what if you change your insurance company or buy comprehensive coverage from some other company after you have made a claim? This is not going to be helpful as once you make an insurance claim, it goes into your CLUE report. A CLUE report contains all the information about your past home and car insurance claims in the past seven years.
So if you try to buy comprehensive insurance from another company, they will take a look at your CLUE report and you’ll get inflated rates. So some price hike is inevitable if your car gets stolen and you claim comprehensive insurance.
But getting your car stolen is not the only way of increasing your insurance premium rates. There are multiple reasons why your comprehensive rates might be higher than others.
One of the most common reasons for inflated comprehensive insurance rates is high-risk locality. If you live in an area where the rate of theft is very high, insurance companies will charge you more to offset the risk of an insurance claim.
This is also the reason many people lie about their garage address when buying comprehensive policies to reduce the cost. But doing this could lead to big issues as lying about your locality comes under insurance fraud.
Another reason why your comprehensive insurance rates are high could be the make and model of your car. Cheaper, basic cars are cheaper to reimburse. Expensive cars, cars that are easier to break into and steal, or cars that are very popular amongst thieves increase the premium rates of comprehensive insurance.
But not everything is bleak here. Getting a more affordable car and installing safety features such as anti-theft locks, trackers, etc will reduce the rates of comprehensive policy. These are the best ways of reducing your comprehensive insurance premium rates.
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Here is everything you need to know about how car theft can increase your insurance premium rates, and the different policies affected by it.