Does insurance cover stolen car?

11 minute read Published on Nov 5, 2023 by BrokerLink Communications

Man in garage looking at his missing car spot

A stolen car is a worst-case scenario for any driver. But if this happens to you, then chances are you want to know if your car insurance policy will cover it. The answer to this question is complicated and often depends on whether your policy includes comprehensive car insurance. We dive into this topic and answer the question whether your car insurance will cover a stolen vehicle.

Comprehensive car insurance and stolen vehicles

Generally speaking, if your Toronto car insurance policy features a type of coverage known as comprehensive insurance, then you should be covered if your car is stolen. Comprehensive insurance is a form of extra protection that motorists can choose to add to their car insurance policies. In most cases, it is optional. However, it may be mandatory under some circumstances, such as if you lease or finance your vehicle. Comprehensive coverage is also known as parked car insurance because it most commonly protects parked cars from loss or damage. With comprehensive insurance, the policyholder and their vehicle are covered for the cost of damage so long as the damage was caused by an insured peril. While perils range between policies and providers, some of the most common perils in Canada include theft, vandalism, fire, wind, water, falling objects, riots, civil disturbances, explosions, and natural disasters and weather. Thus, if your policy has comprehensive coverage, then theft is very likely one of the perils you are covered for. In the event your car is stolen, comprehensive coverage can help pay to replace your vehicle, or if someone attempts a break-in, it can also pay to repair any damage done to your car during this process, such as a damaged lock or a smashed window:

What kind of theft does comprehensive insurance cover?

Examples of theft that comprehensive car insurance may cover include:

  • A missing or stolen car
  • A broken lock or smashed window from an attempted break-in
  • Acts of vandalism, such as slashed tires
  • A thief stealing your car and getting into an accident
  • A thief stealing the catalytic converter, stereo, or another permanent fixture of your car
  • Car keys or fob that are stolen or damaged

What is not covered by comprehensive coverage?

Comprehensive coverage does not cover you for the following:

  • Theft of personal property, such as a wallet or smartphone from your car
  • Damage to your car resulting from a collision
  • Medical expenses resulting from a collision
  • Damage to another driver’s car resulting from a collision
  • Medical expenses for another person resulting from a collision
  • Your car being stolen by a member of your household
  • Damage to your rental car from a collision

Overall, comprehensive car insurance is the main type of auto coverage that protects drivers against theft. However, it does not cover theft of personal items from your car (more on that below). Other common types of auto insurance coverage, like third party liability coverage, accident benefits, or collision coverage will not pay to repair or replace your vehicle if it is the victim of theft.

Does comprehensive insurance cover items stolen from my car?

Many policyholders want to know if comprehensive insurance covers items stolen from car. The truth is that comprehensive coverage is designed to protect your entire car from being stolen, not the items inside of it. Thus, comprehensive insurance does not cover any personal items stolen from your car. Examples of personal items include your wallet, smartphone, jewellery, cash, etc. Rather, car insurance coverage for stolen items typically only covers permanent fixtures that are stolen from your vehicle, like the built-in stereo, steering wheel, or catalytic converter. That said, if a thief smashes your car window and steals your laptop from the backseat, comprehensive car insurance can help pay to have your car window repaired. It just won’t pay for you to replace the stolen item. You can check to see if your home or tenants insurance plan covers you, if applicable.

Deductibles and limits for comprehensive coverage

When adding comprehensive coverage to your car insurance plan in Canada, you will need to select a deductible amount and a coverage limit. The decisions you make here are crucial and will partially determine the payout you receive in the event of a claim. First, your deductible is the amount of money you will need to pay toward an insured loss, such as a stolen car if you ever need to file a claim. Higher deductibles typically result in lower premiums, but you will need to pay more in the event of a claim.

Oppositely, lower deductibles come with higher premiums, but you won’t have to pay as much when filing a claim. Common deductibles for comprehensive car insurance are $500 and $1,000. Using the example of a $1,000 deductible, if your car was stolen and the insurance company calculated the actual cash value to be $15,000, you would receive a payout of $14,000 in the event of a total loss, the determined value of your vehicle minus your deductible.

Note that the value of your car, and subsequently your payout, would likely be higher if your policy has replacement cost vs. actual cash value.

Check out this actual cash value guide to find out how much your car is worth in the eyes of the insurance company.

Other auto insurance that may cover you for a stolen car

Although comprehensive coverage is the most common type of car insurance that covers a stolen vehicle, there are a few other types of coverage that may come into play. These include gap insurance, new car replacement coverage, and rental car reimbursement coverage. Keep reading to discover what they are and how they might help you if your car is stolen:

Gap insurance

Gap insurance is a type of optional car insurance that is designed to cover the difference between the value of your car and the outstanding balance on your car loan. Thus, gap insurance is for those who lease or finance their vehicles, and while not government-mandated, many leasing companies require borrowers to take out this type of insurance. Ultimately, if you have gap coverage, your insurance company will help you pay the remainder of your loan so that you don’t have to pay for it on your own while also trying to buy or lease a new car.

New car replacement coverage

New car replacement coverage is a type of optional car insurance that will pay for the policyholder to replace a new car within the first few years. This type of coverage is expensive, given how quickly cars depreciate in value, but it can be worth it, especially if your new car is stolen.

Rental car reimbursement coverage

Lastly, rental car reimbursement coverage will pay for you to take alternate modes of transportation, such as a rental car, while the authorities are searching for your stolen vehicle. Whether your car is eventually found or not, rental car reimbursement coverage will compensate policyholders for the cost of getting around while they are without their vehicles. This can help alleviate the financial burden and inconvenience of navigating daily life without a vehicle.

What to do if your car is stolen

You wake up and discover that your car was stolen from your driveway overnight. What now? Although this is a worst-case scenario for many, try not to panic. There are clear steps you can follow, ranging from reporting the missing car to the police to filing a claim with your insurance company, that will help get you back on track. Keep reading for a step-by-step guide on what to do if your car is stolen:

1. Call the police

The first step is to notify the local authorities by calling the police. Inform them that your car is missing and file a report. It is recommended that you do this within the first 24 hours that you notice your car is missing. Why? The sooner you notify the police, the faster they can start looking for your stolen car. The quicker this process begins, the more likely they are to find it. Plus, it will allow you to initiate the insurance claims process sooner as well. Please note that when you contact the police about your missing vehicle, you will need to provide them with basic information that will aid in their search.

For example, you can expect the police officer to ask you for your vehicle identification number (VIN), licence plate number, the make, model, and year of your vehicle, the assumed place and estimated time of the theft, whether your car has any identifying marks or modifications, such as a dent or unique bumper sticker, what, if any, personal property was inside the vehicle at the time it was stolen (e.g. purse, jewellery, clothing, laptop, etc.), and lastly, whether your car has any sort of anti-theft or GPS location device inside of it.

2. Contact your insurance company

Once the police report has been filed and the local authorities have begun searching for your vehicle, your next call is to your insurance company.

In order to make a decision regarding your claim, your insurance company will require several pieces of information, and the more you can give them, the better. Information you should be prepared to submit alongside your claim include the police report, eyewitness statements, photos, videos, your car title, the location of all keys before and after the vehicle went missing, the names and contact information of every person who had access to the car, a description of your car including the make, model, and year, as well as the mileage, upgrades, and service records, the number of your insurance policy, and the contact information for your financing or leasing company if applicable.

It is worth noting that your insurance company may also run a credit check to gain insight into your financial standing. Since it’s not uncommon for policyholders to take their car being stolen for the insurance payout, your insurance company will want to know if you have any significant debt as this could increase your likelihood of committing fraud.

Lastly, make sure that you complete any claims forms sent to you by your insurance company. These will need to be filled out for your claim to be formally submitted. Once your claim is officially submitted, an insurance adjuster will be assigned to your claim , and they will help determine the payout amount.

3. Contact your lender

If your car is leased or financed, then you will need to contact your lender right after you contact your insurance company. Not only do you have an obligation to notify them if your car is stolen, but you can also take this as an opportunity to ask for a pause on your loan payments until the police investigation is complete.

4. Wait for your insurance payout

Step four involves waiting for your insurance company to complete their investigation so that you can receive your payout. Assuming your insurance claim is approved, the insurance company will get in touch with you to let you know what your payout will be. The payout you receive will help you replace your stolen vehicle. However, payment amounts for stolen cars vary and will depend on your deductible, coverage limit, and the value of your car. First, your deductible amount will automatically be deducted from the payout you receive. Next, whether your car insurance uses actual cash value (which most do) or replacement cost will determine how your car is valued.

The payouts for replacement cost tend to be higher than actual cash value, since the former does not account for depreciation and the latter does. Regardless of which type of policy you have, you can only receive a payout up to your coverage limit.

In most cases, your coverage limit will be no higher than the actual cash value of your car, which means if your car is stolen, you will likely receive a payout that is equal to the actual cash value of your car, less the deductible. Note that it is the insurance adjuster’s job to conduct a fair valuation of your car.

If the valuation is below what you believe your car to be worth, you can dispute or negotiate the offer. However, you will need to do lots of independent research if you want to win your case. You might even need to hire an independent adjuster or appraiser. Examples of ways that you can dispute the offer include showing proof of recent upgrades or modifications you made to your car.

Get in touch with BrokerLink to find out more about comprehensive coverage and stolen cars

If your car was recently stolen or you want to avoid this awful scenario, reach out to BrokerLink today to learn all about comprehensive coverage. Adding comprehensive coverage to your auto insurance plan is your best bet if you want to be protected in the event of a missing or stolen car. With this type of coverage, you can receive a payout from your insurer for the cost of replacing your stolen vehicle.

A BrokerLink insurance advisor can answer any question you have pertaining to comprehensive coverage, as well as provide you with a free quote on how much it will cost to update your policy. Contact us today to speak with a licensed auto insurance expert over the phone, online, or in person at one of BrokerLink’s 200+ branches across Canada.

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FAQs on car insurance and stolen cars

What happens if I report my car as stolen and it is later found?

If your car is stolen, you report it to the police, and it is later found, your insurance can still cover you. For instance, even if the stolen car is recovered, it may not be in perfect shape. The thief who originally stole it may have smashed the window or broken the lock in order to break into it in the first place. If this is the case, your comprehensive car coverage can pay to repair these damages.

Alternatively, if your car is recovered but is in bad shape, the insurance company might deem it a write-off. As such, provided that you have adequate coverage, they will issue a payout so that you can replace the vehicle, according to the type of policy you have - either replacement cost or actual cash value.

Will car insurance cover my stolen car if I left the engine on?

Generally speaking, yes. Comprehensive car insurance will cover policyholders if their car is stolen, even if they accidentally left the engine running or their keys in the car.

What types of car insurance protect against theft?

Comprehensive car insurance is the most common type of coverage that protects drivers against theft. It can also protect drivers from damage or losses caused by vandalism, fire, water, wind, falling objects, natural disasters and weather, or riots and civil disturbances. In essence, comprehensive coverage protects against non-collision damage.

Other types of coverage that may come into play if your car is stolen include gap insurance, new car replacement coverage, and rental car reimbursement coverage.

Will car insurance cover me if my car is stolen after I left the keys inside?

If your car insurance policy has comprehensive coverage, then you should be covered, no matter what circumstances surround the theft. This means that even if you accidentally forgot your keys inside your car and someone stole it, you would still be covered.

Will car insurance cover a catalytic converter stolen from my car?

Yes. Since catalytic converters are permanent fixtures in vehicles, your insurance company will cover you if it is stolen from your car. Other permanent fixtures that are covered against theft include built-in stereos and steering wheels.

Is comprehensive car coverage mandatory in Canada?

No. Comprehensive car insurance is not a legal requirement in Canada. However, some lenders or financing companies may require it of borrowers. Read the terms and conditions of your leasing or financing agreement carefully to determine if you are obligated to purchase it. Even if you are under no obligation to purchase it, comprehensive coverage is strongly recommended for all drivers, especially since it’s the only type of insurance that covers you for theft.

If you have any questions, contact one of our local branches.