Auto insurance before your car is stolen

Collision and comprehensive insurance coverage for your own vehicle pays for the cost of repairs or for the value of your vehicle in case it is totaled or stolen. You could consider dropping collision coverage when your vehicle has aged to the point that your annual collision premiums are significant when compared to the vehicle's replacement value. Be aware that, if you still have a loan on your vehicle, your loan company may require collision and comprehensive coverage.

While trying to reduce the cost of their auto insurance, many new drivers go without collision and comprehensive coverage. Then there is no insurance 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. Unfortunately, this type of insurance is a little hard to find. 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 to exit your "upside down" situation.


Find out if the auto insurance company pays on stated value, 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.

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