Should You Continue to Pay Insurance If Your Car Is Stolen

January 27, 2012

In the unfortunate event that a driver’s car is stolen, dealing with how to pay insurance on the vehicle may not be the first thing that he or she is thinking about. When it does come to mind, to some, it might seem like a no-brainer. However, there are some very basic considerations that determine whether the victim of an auto theft should keep their auto insurance, at least for the short-term.

Reporting the Crime

The very first consideration for the owner of a stolen vehicle is to effectively report the car stolen. Without this essential step of the process, the owner of a car can actually be liable for the outcomes of accidents as well as any parking violations or moving violations that occur. Reporting the vehicle stolen is also the first step in having documentation to deal with the insurer later on.

The Timeline

Of course, the victim never knows exactly when the car will be returned. The thieves may be out for a joyride, in which case, there is a great chance that the auto will end up in impound in the next couple of weeks. On the other hand, these might be experienced professionals who are sending the car directly to a chop shop, where it will never be recovered.

In the first instance, it's a good idea to keep auto insurance to avoid a “lapse in coverage.” The lapse in coverage is one of those things that insurers love to talk about when raising rates on a driver. It's generally a bad thing to have a lapse, and that's why keeping your insurance for a couple of weeks after that can save money, unless the driver can get concessions from their insurer that revolve around the idea of vehicle theft as an excessive burden on the driver.

Financing Concerns

If the car is still under financing, that can be an additional consideration when thinking about dropping insurance. The driver will want to communicate with the financing company before taking any other steps. If the auto insurance covers theft, and a claim is pending, that's another reason to talk to the insurer before dropping coverage, to avoid any miscommunications. Basically, the driver should take his or her time dropping coverage to be sure that it doesn't affect any other aspect of their financial responsibility for the vehicle.

The Last Step: Keeping an Eye Out

After the driver has chosen whether to terminate insurance in the vehicle, there is always the responsibility of looking out for their property. Even when a car has been reported stolen, car theft victims have reported dealing with high impound fees when a local municipal police force fails to inform them that their car has been found. In some cases, drivers can successfully sue law enforcement or other parties when they end up liable for high impound fees after having their vehicle stolen.