Car theft insurance: Does insurance cover a stolen car?

Losing your car to thieves can be a distressing experience – it also has the potential to leave you nursing substantial losses if you aren’t protected by car theft insurance. We take a look at what’s involved when considering car theft insurance.

For many of us our car provides more than transport – it is also a valuable personal asset.  That makes our cars worth insuring especially as a car is stolen every 11 minutes in Australia.  The catch is that not all types of cover offer car theft insurance.

Can you claim insurance if your car is stolen?

Making a car theft insurance claim can be a streamlined process as long as you have a policy that protects you if your vehicle is stolen.

There are four main types of car insurance, and they don’t all cover car theft.

• Compulsory Third Party (CTP) insurance only provides financial protection for anyone who may be injured or killed in a crash involving your car. It does not cover damage to, or the theft of, your car.
• Third party property insurance offers protection if you damage someone else’s property such as their home or car.
• Third Party Fire & Theft car insurance will typically protect you if your car is stolen, while also offering cover if your vehicle is damaged by fire or if you damage someone else’s property. However, it is important to read the fine print of this type of cover to understand exactly how much of a payout you’ll receive if your car is stolen.  The car theft insurance payout can be limited to a maximum amount. If your car is financed by a car loan, you could be left substantially out of pocket if you owe more than the maximum payout.
• Comprehensive car insurance is generally regarded as the gold standard of car cover as it offers the highest level of protection. Comprehensive car cover usually provides protection for a variety of scenarios including if your car is stolen. You may also be able to have a direct say in the car theft insurance payout by choosing between insuring your car for market value or an agreed value.

What is the best type of car theft insurance?

The choice between third party fire and theft cover or a comprehensive policy may come down to your budget and your personal needs. The premiums on comprehensive cover can be higher as you are buying more protection.

That said, it pays to know the risks. If you drive a high value vehicle, or if you owe more than $10,000 on a car loan, it may be worth considering comprehensive car cover.

As a guide to which vehicles tend to attract the attention of thieves, small passenger cars and SUVs accounted for more than half the cars stolen in the year ended June 2021, according to the National Motor Vehicle Theft Reduction Council (NMVTRC). People movers were least likely to be stolen, accounting for just 1% of car thefts.

When it comes to the makes and models most likely to be targeted by car thieves, NMVTRC says the top five cars stolen in the year to mid-2021 were:

1. Holden Commodore VE MY06-13
2. Toyota Hilux MY05-11
3. Ford Ranger PX MY11+
4. Toyota Hilux MY15+
5. Holden Captiva CG MY06-19

The key to choosing the cover that’s best suited to your needs is to shop around, and understand how much protection you’re buying as well as any exclusions that could leave you out of pocket if you need to make a car insurance claim.

Car theft is big business for thieves

We all like to hope we’ll never experience the stress of having our car stolen, but car theft is remarkably common.

The NMVTRC states that in the 12 months to June 2021, 47,803 cars were stolen across Australia. This was the lowest figure for 20 years, and the NMVTRC believes this reflects COVID lockdowns that resulted in curfews, travel restrictions and limits on time spent outside the home.

What’s interesting, is that NMVTRC says advances in security technology have made it impossible to ‘hot wire’ a modern car. But that hasn’t stopped car thieves. NMVTRC points out that 70% of cars are stolen with their own keys, and half of all cars are taken from the owner’s home – be it their driveway, carport or garage.

Driving an older and perhaps less valuable car doesn’t make your car less attractive to thieves. On the contrary, NMVTRC found 37% of cars stolen in the year to mid-2021, had a value below $5,000. Only 3% of car thefts involved a car worth more than $50,000.

Along with the inconvenience or sense of violation that can accompany car theft, the NMVTRC warns that insurance does not always cover the cost of a stolen car, and victims can be left out of pocket by an average of $5,000.

Note too, while car theft has reduced during the pandemic, the NMVTRC, which was disbanded in late 2021, warns that car theft is likely to increase following the relaxation of COVID-related travel restrictions. It could make having appropriate car insurance in place even more important.

How to help prevent your car being stolen

Prevention can be worth a tonne of cure when it comes to car theft, and some simple steps can help to keep your vehicle safe. NMVTRC recommends several precautions.

• Don’t leave keys lying around the home where a thief could see them
• Don’t tag your car keys with your name or address – use a mobile phone number or driver licence number instead. That way if you lose your keys, a thief can’t track your car down
• If the car is at home but you are out, make sure you have all the keys with you
• If your car is left unattended, close the windows, lock the doors, and take the keys with you
• If you have an older car, consider fitting it with an engine immobiliser. MMVTRC says this can cost as little as $220 and it will prevent thieves being able to hot wire your car.

What do you do if your car is stolen?

Discovering your car has been stolen is distressing, but if it happens to you, keep a level head. Insurer Budget Direct suggests first making sure your car really has been stolen. It can be easy to make a mistake about where the car was parked, especially if you’re in a large car park or an unfamiliar area.

If you’re sure the car is missing, take the following steps:

• Report the theft to the police

The sooner you report the theft, the quicker the police can take action.  The police will also give you an incident report number, which your insurance company will ask for when you make a car insurance claim.

• Contact your insurance company

When you have an incident report number, call your insurance company. They can start the ball rolling with your claim straight away.

• Get in touch with your lender

If your car is under finance and there is still money owing on your car loan, let the lender know your car has been stolen. Any payout from car theft insurance may be paid direct to the lender by your insurance company rather than being handed over to you.

• Think about what was in your car

If you left a wallet or even a debit or credit card in your car, contact your bank immediately so the cards can be cancelled. Did you leave your house keys in the car? If so, and there was personal mail in your car, it could be wise to change the locks to your home.

Learn more: What to do if your car is stolen

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