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What happens when your car gets stolen? As you might have seen in the news or maybe you’ve been a victim yourself, auto theft has become a crisis in Canada, particularly in Ontario. 

According to Équite Defending Against Insurance Crime, The first half of 2023 in Canada saw 34,861 vehicles stolen. With Ontario and Québec reporting the highest number of auto thefts. In fact, the Insurance Bureau of Canada reported that private auto insurers in 2022 paid out $1.2 Billion in theft claims.

With one in four Canadians affected by auto theft, it’s a widespread concern that has Canadians wondering how they can protect themselves in the case of auto theft. 

Does Insurance Cover A Stolen Car?

The quick answer is yes, but it depends on the type of auto insurance policy you have. A basic auto insurance policy won’t cover theft. Therefore, if you have a new expensive car, you need to add on additional coverage. Typically, you’ll choose from specified perils, comprehensive coverage, or all perils 

Specified Perils  

Specified perils offers coverage for damage or loss to your car from specific events. For example, theft, hail, windstorms, lightning damage, etc.

Comprehensive Coverage

Comprehensive insurance is an optional coverage you can add to your basic auto insurance plan. With comprehensive coverage, you’ll receive all the same coverage you would with specific perils plus more. For example, falling objects, non-collision damages, and vandalism. 

All Perils

If you’re looking for the most coverage, consider all perils coverage. This is a combination of comprehensive coverage and collision coverage. 

What Is The Extent Of Coverage For A Stolen Car?

If your car insurance policy covers car theft, you’ll usually be paid up to the actual cash value of your car minus your deductible.

If you’re financing your car, you can use the insurance payout to pay off the loan. If the payout is less than what you owe, you’ll have to pay the remaining loan out of pocket. 

This is when additional coverage options like gap insurance can come in handy.

Cash Value 

Cash value refers to the payout of the vehicle by your insurance. In this case, Insurance companies assess the value of your car at the time it was stolen. The estimate considers your car’s age, depreciation, condition, mileage, and more, as part of determining the payout. 

Therefore, if your car was purchased in the past few years and has low mileage, your payout would be larger compared to a scenario where your car is over 10 years old and has high mileage. Again, payout and exact policies depend on the insurance provider. This is why familiarizing yourself with your coverage is crucial to ensure protection in the case of auto theft.

Deductibles

A deductible in insurance is the amount of money you agree to pay out of pocket before your insurance coverage kicks in to cover the rest of the expenses in the event of a claim. The deductible you’ve chosen for your policy affects the payout. 

Suppose your car is stolen and the insurance company determines the cash value of 

your vehicle at the time of theft to be $20,000 and you have a deductible of $2,000.

Your insurance company would provide a payout for the value of your stolen car, minus the deductible – which in this case would be $18,000. 

Making An Insurance Claim For A Stolen Car

In the event of auto theft, immediate action is crucial. Notify the Police first and foremost. Afterwards, contact your insurance company or broker to notify them and start the claim process. 

Your insurer will likely request a claim form and documentation, such as:

  • The police report and evidence supporting your claim. 
  • Information about your vehicle, including its make, model, and VIN.

Once your claim is submitted, the insurer will assess the information provided and investigate the theft. If approved, you’ll receive a payout based on your policy’s terms, minus any deductible.

What Happens When A Financed Or Leased Vehicle Is Stolen?

If your vehicle is leased, the settlement from the insurance claim will typically be sent directly to your lessor, as they technically own the vehicle.

If your vehicle is financed and there is a lien on it, the settlement will generally be sent to you. This is unless your agreement with the lien holder or financing company specifies otherwise. 

Can I File An Insurance Claim For A Stolen Financed or Leased Car? 

Having a leased car or an outstanding loan affects your insurance payout. If your car’s value is less than what you owe, you’ll need to cover the remaining loan balance unless you have G.A.P. insurance, which covers the balance. On the flip side, if your car is worth more than your loan balance, part of the payout may go to your lender, and the rest to you.

What Happens If Your Rental Car Is Stolen? 

You are covered under a Loss Damage Waiver (LDW), in case your rental vehicle is stolen. Typically offered by rental car companies, LDW provides coverage for damage or loss resulting from accidents. This protection usually incurs a daily fee of around $20 when renting a vehicle.

Is Car Theft Covered Under Credit Card Car Rental Insurance?

Credit card car rental insurance provides coverage for rental vehicles, including protection against damage from collisions, theft, or vandalism. However, coverage limits and conditions vary among credit card companies, so it’s crucial to review your card’s terms. Remember, relying solely on credit card rental insurance may still leave you responsible for deductibles and costs exceeding coverage limits. 

Do note that if you have regular car insurance, the credit card car rental insurance will act as a secondary coverage, as it is an added measure to your primary insurance.

Bottom Line: Protect Yourself And Your Car 

Although there is no sure way to stop vehicle theft, there are precautions you can take to reduce or stop potential theft. Certain safety products such as alarm systems, steering wheel locks or brake locks can be effective anti-theft measurements. 

Similarly, parking in a locked garage or a well-lit area can also deter thieves. Lastly, understanding what’s covered under your insurance policy is important. If car theft is a major concern for you, ensure you’re covered for it by opting for the right coverage. 

Frequently Asked Questions

Does a car theft increase my insurance premiums?

Yes, a car theft will impact your insurance premiums, however, the degree to which it may increase will be based on numerous factors. Your claims history, neighbourhood crime rates, and whether your vehicle is considered high-risk for theft.

Does insurance cover valuables in the car?

No, car insurance typically does not cover personal property left in a vehicle. While it’s common for people to leave valuables in a car,  car insurance is designed to cover the vehicle itself and related liabilities. Theft of personal property is generally covered under a home or tenant insurance policy, even if the theft occurred outside of your property. 

Does car insurance cover damages to cars from attempted theft?

If your car’s window is damaged in a break-in, your car insurance, specifically comprehensive coverage, should cover the repair or replacement costs.  If your car is damaged from an attempted theft, notify your insurance company and take photos and/or videos of the damage. Once you’ve submitted your claim and have been approved, your insurer will arrange for repair or replacement. Remember, you’ll be responsible for paying the deductible agreed to in your policy, and your insurer covers the rest.
Maidina Kadeer, BA avatar on Loans Canada
Maidina Kadeer, BA

Mai Kadeer is a graduate of Concordia University, with a BA in English Literature, with a minor in Law and Society. Mai was a student strategist on the Concordia University Senate (2016), through the Academic Planning and Priorities committee. She has a background in financial budgeting as a board member for non-profit organizations, such as the Quebec Public Interest Research Group and the Concordia Food Coalition. For the past five years, Maidina has worked as a content specialist. Mai is passionate about helping Canadian consumers with financial management and literacy so they can make informed decisions regarding their personal finance.

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