Does car insurance cover theft?

It would be a worst nightmare for many drivers: coming out to your driveway and finding your car has vanished. 

Sadly, even if you take every precaution, car thefts do happen. In 2022/23 130,521 vehicles were stolen in England and Wales, according to the Office of National Statistics (ONS), an increase from 108,028 the year before. 

Luckily, most insurance policies will cover you if your car is stolen or broken into – so you shouldn’t usually be left out of pocket. 

However, there are a few differences between policies to be aware of, so it’s important to know exactly where you stand.  

What should I do if my car is stolen? 

The first thing to do is to stay calm and confirm that your car is stolen. Cars are all too frequently towed if parked in the wrong place when the driver didn’t realise. You can check with the police on the 101 non-emergency number whether this is the case. 

Also check with family members who may have borrowed the car without letting you know. 

If it has been stolen then the first thing to do is to tell the police by calling 101. Give them the vehicle details and they will give you a crime reference number, which is important for making an insurance claim. 

Give that number to your insurer and you can start the claim. 

Will my car insurance cover me if my car is stolen? 

The good news is that in most cases the answer is yes.   

There are generally three types of car insurance: third party; third party, fire and theft; and fully comprehensive. 

As the name suggests, third party, fire and theft insurance should pay out if your car is stolen – as will fully comprehensive policies, the highest level of cover.  

Third-party insurance is the most basic level of cover and only covers you if you damage someone else’s car or injure another driver. This means that if you have this type of policy it is unlikely to pay out in the case of theft. 

There is a chance that your insurer could refuse to cover you if it believes you were careless and this led to your car being stolen, so make sure not to leave windows open, or your keys or any valuable possessions inside the car. 

How much will I receive for my claim? 

The sort of pay out you receive will depend on the circumstances and also your individual policy.  

If the car is recovered with minimal damage, then the claim should be fairly straightforward, simply making good any repairs. 

If the car is not found or is irreparable, you will usually receive a payout for the value of the vehicle. Exactly how much you receive will depend on your individual policy but generally, it is supposed to reflect the amount you could have sold the car for. 

If you don’t agree with the proposed amount you can challenge it. Use sites like Autotrader or those offered by local garages if you want to try this. 

Will I be covered for possessions in my car? 

Your car being stolen could only feel worse if there were valuable possessions contained inside.   

Some fully comprehensive policies might cover you for possessions stolen alongside your car, although this will depend on the individual level of cover. 

Other types of car insurance usually won’t payout for lost personal possessions, but you may be able to claim on your home insurance if you have the right type of cover. Be aware that you can only claim for possessions on either your car or home insurance, not both. 

Will my car being stolen affect my insurance premium? 

Unfortunately, a claim for a stolen car, like any other claim, is likely to affect your premium when you come to renew your policy. 

When calculating how much you pay, insurers assess the risk of covering you. If your car has been stolen before and your circumstances haven’t changed, then they will consider there is a possibility it could be stolen again. 

If you live in a postcode with a high rate of car thefts then this could also mean you have to pay more. 

Check with your insurer whether claiming for a car theft will affect your no-claims discount. While policies will differ, it is likely that a claim will not affect your discount. A claim for theft on policies underwritten by Axa for example, will not affect your discount. 

Do I need to pay the excess? 

You will usually need to pay the excess on the policy. The excess is the amount you need to pay on any claim. Check the details of your policy wording to find out your excess. 

On renewal you may be able to save money on your car insurance by opting for a higher voluntary excess. 

Will I get a courtesy car? 

Unlike if your car is damaged, when your car is stolen then it is unlikely that your insurance policy will provide a courtesy car in the meantime. While it depends on the exact terms and conditions of your policy, most insurers won’t provide a hire car in the same way they would if your car was damaged. 

You can, however, sometimes opt for hire car cover as an optional extra. This will cost more – and there will be some limits – but it will give you the peace of mind that should your car be stolen you will be able to keep driving in the meantime. 

What if my car is on finance? 

If your car is leased or on finance then the process of claiming on your insurance will be exactly the same as if it was privately owned.   

You still need to tell the police and your insurer, but you will also need to tell your finance company and it will be the company and not you which receives the payout. 

It is worth being aware that there is a chance that the amount your insurer is willing to pay out might not be enough to cover the amount that you need to pay the finance company, potentially leaving you out of pocket. 

If you are getting a car on finance, you might want to consider GAP insurance – standing for “guaranteed asset protection” – which will cover you for any shortfall. 

How can I avoid car theft? 

It is important to take precautions that might prevent your car being stolen, both to avoid awkward conversations with your insurer but also for your own peace of mind.  

Always check the doors are locked and windows are closed when leaving the vehicle, and make sure not to leave valuables on show which could attract thieves.  

If possible, park your car in a locked garage and try to avoid parking on the street away from your home. You could also consider fitting an immobiliser or tracking system to your vehicle, particularly if you live in an area with a high crime rate.  

Finally, many modern cars are fitted with a keyless entry system. These are very convenient, but are more susceptible to theft than old fashioned locking systems. 

Make sure that, when you put your key fob away at night, you don’t leave it near the door where it could be close to the car on the driveway. Even better, purchase a pouch which blocks the signal and makes it more difficult for thieves to exploit it.