Editor's note: This article first appeared on CarInsurance.com and is reprinted here with their permission. Click here for the original post.
If your car is stolen, you'll likely first call the police to file a report. Your next step should be to call your car insurance company. But don't expect it to immediately start shelling out big bucks to cover your loss.
First, you must have comprehensive insurance to file a claim for a stolen car, and even then you may be investigated as a suspect in the crime before your insurer pays out.
Second, you'll be asked to provide the following details when filing your claim, says Rick Lower, director of claims training at Geico:
- A description of the vehicle, including its year, make, model and license plate number.
- Information on where and when you last saw your vehicle.
- Whether the vehicle is equipped with a tracking system such as LoJack or OnStar.
- Whether you saw any glass or debris on the ground where your vehicle had been parked.
- Whether you had any personal property in the vehicle.
- The location of all keys to your vehicle.
- Information on your finance or leasing company if your car isn't paid off.
Next, your car insurance company will want to be sure your claim is legit, which means the company will probably take a deep dive into your financial and personal life to rule out fraud.
(Photo: Shutterstock)
For example, some drivers having trouble making their car payments may pay someone to "steal" their vehicle or the car owner may abandon it in a remote area. The car is then reported stolen and the insurance company reimburses the car owner, who then uses that money to pay off the car loan or simply pockets the money.
Preventing fraud is important because everyone winds up paying higher rates when insurers pay out money for bogus claims. Insurance companies determine rates, in part, based on losses. So the more losses—or claims filed—the higher the premiums, to some degree.
Checking your loan, bank and social media accounts
"Theft claims typically require a significant amount of investigation," says Scott Kohl, vice president of claims field operations at Safeco Insurance, which investigates all of its auto theft claims. "The circumstances surrounding the loss will determine the scope of the investigation."
That insurance company investigation could involve reviewing your car-payment history, policy history, claims history and vehicle details, Kohl says.
Your social media accounts also may be checked, says Frank Scafidi, spokesman for the National Insurance Crime Bureau (NICB).
The NICB may be called in by an auto insurer to further investigate a theft claim if fraud is suspected. For the first three quarters of 2013, the NICB investigated about 9,200 questionable vehicle-theft claims.
Social media "is like the low-hanging fruit of the criminal element," Scafidi says. "People do stupid things and then broadcast them to the world."
And newer-model vehicles aren't the favorites of car thieves. Older vehicles may lack anti-theft systems or have less sophisticated mechanical systems, making them easier targets. Additionally, older cars are taken to chop shops where they're sold for parts and sent overseas, which is a lucrative market for thieves, Kohl says.
(Photo: Shutterstock)
Benefits of buying comprehensive insurance
Often owners of older vehicles will drop their comprehensive insurance in order to reduce premiums. If you've gone that route and your car is swiped, you'll wind up paying to buy another car.
"Vehicle owners with older-model vehicles have to balance the premium cost of comprehensive insurance coverage and any coverage deductible they may wish to purchase, with the cost to replace the vehicle if it were stolen," Lower says.
The average cost of comprehensive coverage was $133 in 2010, according to the National Association of Insurance Commissioners.
Rather than dropping the coverage entirely, you could opt to increase the deductible, which would reduce the cost of your comprehensive coverage, yet you would still receive some financial protection if your vehicle is stolen, he says. Comprehensive insurance will pay the actual cash value of your car, minus your deductible.
Car insurance companies typically have a waiting period of 30 days—though Safeco's is 13—before they will pay a stolen car claim, as it gives time to see if the vehicle will be found.
If your car is recovered but comes back damaged, your insurance company will determine whether it can be repaired or is a total loss, Lower says. If it's declared a total loss, you're paid the actual cash value of the car, minus your deductible.
If your car suddenly reappears after your insurance settlement, you can still kiss it goodbye, unless you want to buy it back. During settlement process you typically sign the title over to your insurer, and because you've already been compensated, your insurance company will retain ownership of the vehicle, Kohl says. Depending on its condition, it will be sold for salvage or at a wholesale auction. If state laws and your insurance company's guidelines allow, you may be able to buy the car back.
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