Vehicle Theft: Insurance Impact

Vehicle theft is an increasing problem in the United States, with more than 1 million vehicles stolen in 2022 alone. This has a significant impact on insurance rates, as car insurance companies base their calculations on risk. If you live in an area with high car theft rates, your insurance premium is likely to be higher, even if your specific neighbourhood is considered safe. This is because car insurers view areas with high theft rates as high-risk areas, and they will charge higher premiums to offset the potential cost of claims.

Additionally, certain makes and models of cars that are commonly targeted by thieves may also result in higher insurance rates. Older vehicles, for example, are often targeted due to their ease of access, and certain popular sedans, trucks, and SUVs may be at a higher risk of theft.

Comprehensive coverage is the type of car insurance that covers theft or vandalism of your vehicle. This type of coverage is optional but highly recommended for peace of mind. It typically covers the actual cash value of your car, minus your deductible, and may also include coverage for custom parts and equipment.

Comprehensive coverage includes vehicle theft

Comprehensive coverage is an optional type of insurance that protects your vehicle from damage caused by events outside of your control, such as theft, vandalism, fire, and severe weather. It is not required by law in any state, but it is usually required by lenders if you are leasing or financing your vehicle. If your car is stolen and not recovered, comprehensive coverage will pay the current value, or actual cash value (ACV), of your vehicle minus your deductible. This is true even if the car was stolen with the keys left inside.

Comprehensive coverage also covers theft of parts that are permanently attached to the car, like a stereo. However, it does not cover the theft of personal property inside your car, such as a laptop or cell phone. To insure personal belongings, you would need a separate renters or homeowners insurance policy.

Comprehensive coverage also covers vandalism, including broken windows or other damage resulting from a theft attempt. If your car is recovered but damaged, comprehensive coverage can pay for repairs up to any limits and minus your deductible. If the damage is severe enough that the car is considered totaled, your auto policy will pay up to the vehicle's ACV minus your deductible.

In addition to theft, comprehensive coverage also protects against damage caused by animals, falling objects, broken glass, and weather. It is often confused with collision coverage, which protects against damage to your car from hitting another vehicle or object, regardless of fault. Comprehensive coverage is also different from "full coverage," which typically refers to a combination of comprehensive and collision coverage, plus any other coverage mandated by your state.

The cost of comprehensive coverage varies depending on factors such as your location, local theft rates, the type of vehicle, and auto repair costs. On average, it costs around \$12 per month, but it can be higher or lower depending on your specific circumstances.

Insurance rates increase in high-risk areas

Insurance rates are influenced by the location where the insured item is based. For example, car insurance premiums are impacted by the area where the car is typically kept overnight, referred to as the "garaged" address. If this location has a high rate of theft, accident, or weather-related claims, insurance companies will consider it a high-risk area and charge higher premiums.

The same logic applies to homeowners' insurance. If the area has a high frequency of natural disasters, such as wildfires, tornadoes, hurricanes, or other extreme weather events, insurance companies will deem it high-risk and increase rates to offset potential claims.

Additionally, insurance companies also consider the likelihood of theft and vandalism when setting rates for car insurance. Areas with higher levels of crime or vandalism will result in higher insurance costs.

Furthermore, insurance rates can be influenced by the cost of repairs and replacements in a particular area. For example, if car repair costs are generally higher in a certain region, this will be reflected in higher insurance premiums.

It's important to note that insurance rates are not increased on a whim, and any changes are typically tied to an increase in insurance risk.

Car models influence insurance rates

The make and model of a car can significantly influence insurance rates. This is because different models are more prone to costly insurance claims. The cost of insurance is determined by factors such as the car's safety ratings, repair and replacement costs, the likelihood of causing damage to others, and the frequency of insurance claims associated with that particular make and model.

For example, the 2019-2021 Chevrolet Malibu has 98% more bodily injury losses than the average car, resulting in higher insurance rates. On the other hand, the Subaru Ascent, Subaru Forester, and Honda Passport have significantly lower bodily injury losses, making them cheaper to insure.

The trim level of a car also impacts insurance rates. Higher trim levels with more features and expensive upgrades will be more costly to insure due to higher repair costs. For instance, the Honda Civic and the Honda Civic EX-T have a price difference of $120.20 per year for insurance, with the EX-T being the more expensive option.

Additionally, luxury vehicles tend to be more expensive to insure as they are more attractive to thieves and have higher replacement and repair costs. The Tesla Model 3, for instance, has an average insurance cost of $2,830 per year, which is significantly higher than other popular cars.

The body type of a vehicle also plays a role in insurance rates. Coupe-style bodies, associated with sports cars, often have higher insurance rates due to faster speeds and riskier driving behaviours. Sedans are also more likely to be involved in accidents and therefore have higher insurance costs. Vans, on the other hand, tend to be cheaper to insure as they are less likely to be involved in accidents and may sustain less damage in crashes due to their larger size.

In summary, the make and model of a car have a substantial impact on insurance rates, with factors such as safety, repair costs, and the frequency of insurance claims being key determinants of insurance prices.

Claims history impacts insurance premiums

The nature of the claim matters. For example, if a driver has been in a collision and made a claim, they should verify the accuracy of the collision report. An incorrect report could state the driver was at fault or that the report is open when it has been closed, which could increase their premium.

The timing of the claim also matters. Insurance companies take into account how recently a driver has been involved in a collision or made a claim when calculating premiums. The longer the time since a claim, the lower the premium is likely to be.

The details of the collision can also affect the premium. This includes who is at fault, the driver's record, and the amount of the claim. For example, a drunk driving incident will likely trigger a non-renewal from almost every insurance company.

In addition to claims history, insurance companies also consider a driver's history over the same period, including any tickets, collisions, convictions, and driving courses.

To get the best insurance rates, it is recommended to shop around and compare quotes from different insurance providers, especially if you have a good driving record with no history of major claims.

Anti-theft devices reduce insurance costs

Vehicle thefts have been increasing year after year, with over one million car thefts reported in 2022 in the US alone. Comprehensive car insurance can help replace or repair your stolen vehicle, but it is optional and often expensive. However, there are ways to reduce insurance costs while also protecting yourself from theft. Installing anti-theft devices can lower insurance rates as they decrease the likelihood of a payout from the insurance company.

Anti-theft devices are proven to deter car thieves and improve vehicle security. In most cases, car insurance providers will offer discounts for vehicles with anti-theft devices. These discounts can be as high as 20% or more, depending on the insurance provider and the type of equipment. Devices such as immobilisers, satellite tracking devices, and steering wheel locks are highly effective in preventing theft and are often rated highly by insurers. Even a simple car alarm can be enough to scare away potential thieves.

Some states require insurance providers to offer discounts for vehicles with anti-theft devices, but these usually only apply to comprehensive insurance plans. If you only have liability insurance, which is the minimum requirement in many states, your policy might not cover vandalism or theft. In this case, an anti-theft device may not significantly reduce your premium. However, it is still worth considering as it can provide some discount.

It is important to note that the effectiveness of anti-theft devices varies, and so does the discount they can bring. More advanced systems such as OnStar may result in higher discounts, while simpler devices like car alarms may have lower discounts. Additionally, the discount will only apply to your comprehensive coverage. Therefore, it is recommended to shop around and compare insurance providers to find the best prices and take advantage of the anti-theft devices in your vehicle.

Frequently asked questions