How Much Will Insurance Pay for a Stolen Car?

If your car has recently been stolen, and you’re on the verge of claiming your auto insurance for theft, you may be wondering how much your insurance will pay for the stolen car.

Or, if you’re shopping for car insurance, it’s essential to know how much coverage you will get for a stolen car. Either way, it’s a legitimate concern. Typically, your insurer will pay you the actual cash value of your car minus depreciation and deductibles up to your coverage limit.

There are mainly two types of car insurance that pay for a stolen car; comprehensive auto insurance and gap insurance. For a better understanding this article discusses whether car insurance covers theft, how much does auto insurance pay for a stolen car, types of car insurance that covers theft, and what to do if your car is stolen.

Does Car Insurance Cover Theft?

It’s actually a vital concern, does car insurance cover theft? Yes, it does. According to Detroit News, there have been 8,404 car thefts in Michigan in the year 2024, which is a 22% increase since 2019.

Additionally, based on Michigan State Government’s statistics more than 1 million vehicles have been stolen throughout the US as of 2023. So, this means that a vehicle was stolen every 32 seconds.

As car thefts are so common in Michigan and many other areas in the US, it is a huge financial risk to have a car without theft coverage. So, to provide substantial financial protection, car insurance companies cover theft.

To financially protect your car against theft it’s crucial to get the right types of car insurance with adequate coverage at an affordable rate. If looking for an insurance agency in Michigan, you can explore our insurance solutions, or visit our regional offices in Flint MI, Saginaw MI, and Mt Pleasant.

How Much Does Auto Insurance Pay for Stolen Car?

The amount that your insurer will pay for a stolen car mainly depends on your auto insurance deductibles, and the coverage that you’ve purchased. Let’s say you have purchased comprehensive insurance with a coverage limit of $100,000 and a deductible amount of $5,000.

After you claim your comprehensive auto insurance, you will first have to pay the $5,000 deductibles. After you’ve paid the deductibles, your insurance company will pay your car’s actual cash value (ACV), which is your car’s purchase price minus depreciation.

So, if your car was purchased for $40,000, and after 3 years if it has depreciated by $5,000 and you need to pay a deductible amount of $5,000. Your insurer will pay you $30,000 as compensation for the stolen car.

What Type of Car Insurance Covers a Stolen Car?

There are two types of car insurance that covers a stolen car which includes comprehensive auto insurance and gap insurance. Although both of these car insurance coverages provide financial compensation for a stolen car, they function in broadly different ways.

Here’s a detailed breakdown to help you understand the similarities and differences between these two car insurance coverages.

Comprehensive Insurance

Comprehensive auto insurance is an optional coverage that has been specifically designed to cover unprecedented accidents that are beyond your control, which includes theft. As it was mentioned before, it typically covers the actual cash value of your car which is determined by deducting the depreciated amount.

If you want to financially secure yourself from the risk of car theft, then it is crucial for you to ensure you have comprehensive auto insurance. If you’re not sure how much coverage limit you should purchase, it should at least be the purchasing price of your car, or any amount beyond that.

Gap Insurance

Gap insurance is an add-on insurance coverage that’s particularly designed to help you pay off your car’s loan purchase along with the car’s actual cash value. The main difference between gap insurance and comprehensive insurance is gap insurance pays the loan amount that you owe to the lender or auto insurance dealership.

Here’s an example for a better understanding.

Similarly, let’s say your car is worth $40,000, and 3 years later it has depreciated by $5,000. So, the car’s ACV is $35,000. Now you need to pay your deductibles of $5,000, and you owe your financial lender $5,000.

So, after you pay your deductibles of $5,000, your insurer will compensate you for the ACV of $35,000 plus $5,000 that you owe your lender. So, you will get a total gap insurance payout of total $40,000.

What to Do If Your Car is Stolen?

If your car gets stolen, it is crucial to act and respond promptly as it’s a legal issue, and also to avoid complications with your car’s theft insurance claim. Here’s what you should do as follows.

• Report the stolen car incident to the police
• Call your insurance company and claim comprehensive or gap insurance
• Report the theft to your local DMV
• Check for GPS tracking (if applicable)
• Monitor online listings and social media
• Notify your lender or leasing company (if applicable)
• Secure a rental or alternative transportation

The Bottom Line 

Even the thought of your car getting stolen feels like a dreadful nightmare, doesn’t it? Unfortunately, car thefts are very common in many locations within Michigan and across the US.

So, that’s why it’s crucial for you to consider getting car insurance coverage that covers stolen cars. You should consider getting comprehensive auto insurance if you have already paid in full for the car.

However, if you’ve bought the car on credit or loan then you should acquire gap insurance. As gap insurance is an optional add on insurance, you can combine it with comprehensive auto insurance coverage.

When it comes to the coverage limit, it’s always best to insure the amount of your car’s purchasing price or more. If you have any questions, or if you’re interested in exploring our comprehensive auto insurance, gap insurance and more, contact us today for a free quote and consultation.

FAQ

Will insurance pay if a car is stolen?

Yes, if you have comprehensive insurance or gap insurance then your insurance will pay the actual cash value (ACV) after claiming your car insurance. The ACV is typically the car’s purchasing price minus depreciation.  

How is the value of a stolen car determined?

The value of a stolen car is determined based on the ACV. Your insurance company will compensate you for the current market value of your car. 

How long does it take for insurance to pay out on a stolen vehicle?

It takes about 30 days for an insurance provider to pay out on a stolen vehicle. 

What happens if my car is stolen and I have no insurance?

Unfortunately, it will be a total loss for you if your car is stolen and if you don’t have any insurance. You would practically have nothing to do other than rely on the police to find your car.