Have your question or comment appear below!

Auto insurance before your car is stolen

Earl Wilson once said "If you think nobody cares if you're alive, try missing a couple of car payments." That's exactly what would happen if you had your car stolen, and you have not paid off the loan. Without theft coverage technically, you would be in default of the loan.

Comprehensive and collision insurance coverage pays for the cost of repairs or for the value of your vehicle in case it is totaled. The theft portion covers you if your car is stolen. You could consider removing theft coverage when your vehicle has aged to the point that your annual collision premiums are significant when compared to the vehicle's replacement or actual cash value. If you still have a loan on your vehicle, your loan company probably requires theft coverage. Expect a phone call from the finance company strongly encouraging you to reinstate your theft coverage if you cancel.

While trying to reduce the cost of their auto insurance, many new drivers go without theft insurance. Then there is no coverage if their car is stolen.

Get gap protection. If your vehicle is totaled or stolen, your auto insurance is only going to pay the amount that the vehicle is worth, not what you still owe on a loan or lease. This point is misunderstood by many consumers. If you are "upside down" on a car loan or lease, you'll have to come up with the cash to pay off the remainder of the amount you owe. To prevent this situation, you need "gap" insurance.

Gap coverage is usually included in leases, but almost never for loans. Gap insurance is not hard to find. You may not be offered it by a car salesman focused on making comission. Remember to ask for it. Some auto insurance companies offer it, some extended-warranty companies have it, and some dealers sell it. Fortunately, gap coverage is not very expensive and can be dropped as soon as you pay enough of your loan or lease exiting your "upside down" situation.


Find out if the auto insurance company pays on replacement cost, market (cash) value or an agreed pay out in case your car is stolen or vandalized. You need to know how your claim would be paid in the event you have a problem.

When to get theft insurance:

• You have a newer, higher value car
• You have a car loan, that probably requires theft to avoid default
• You can't afford to replace your car, if stolen
• You live in the hood

When not to get theft insurance:

• Your car loan is paid off
• You keep your car garaged
• You live in the a low risk theft area
• You have a lower value older car
• You can afford to get another car

Auto insurance; Stolen car links:
Top ten stolen cars
Vehicle Theft Insurance
Most stolen collector vehicles
Car Theft Hot Spots
Rental car insurance
Before your car is stolen
After your car is stolen

Written by Craig J. Casey

Financial Writer helping people with their insurance problems on the net since 1998.

blog comments powered by Disqus