If someone burglarizes your house, homeowners insurance covers the loss. If someone steals a vehicle out of your driveway or your garage, however, your car insurance had better cover it because homeowners insurance won't. According to Lemonade Inc., an astounding 52 percent of homeowners aren't aware of what their homeowners insurance will and won't pay. Some may assume the policy will cover a theft takes place on their property; however, they would be horribly mistaken.
TL;DR (Too Long; Didn't Read)
While your homeowners insurance will pay for possessions you had inside the stolen car, your car insurance company is who handles the car theft itself. However, you do need to have comprehensive auto coverage.
Comprehensive Coverage for Your Car
If someone swipes your car, even auto insurance may not pay your claim. Auto policies include several different types of coverage: collision insurance, liability coverage, personal injury protection and comprehensive coverage. It's comprehensive coverage that pays for car theft.
Because comprehensive coverage pays back less money as your car ages, a common rule of thumb is that it's not worth carrying if the annual coverage costs more than 10 percent of the car's replacement value. For example, if your car is worth $3,000 and your deductible is $1,000, the company would only have to pay $2,000. So if your annual coverage was $200 or more, it wouldn't be worth keeping the comprehensive coverage. Of course, if you have no comprehensive coverage, your policy can't help you.
Coverage for What's Inside
Although homeowners insurance won't protect your car, it will protect what's inside of it. Homeowners insurance covers not only theft from your house but off-premises theft – personal property that's in your car when the car is stolen or that's stolen out of your car is covered.
Homeowners and comprehensive divide up the interior of your car based on whether an item is part of the car. Claims for a detachable stereo go to homeowners; a built-in stereo is covered by comprehensive.
Off Premises Coverage
Your off-premises coverage usually extends to 10 percent of the policy's face value: If you have a $200,000 policy, that's $20,000. Individual valuable items, such as jewelry or a designer gown, may not be covered for full value unless you take out extra insurance focused on those specific items.
If whatever you lose is less than your deductible, you're out of luck. If it costs $1,000 to replace your laptop and your deductible is $1,500, homeowners insurance is of no use.
Claiming Your Car
If you don't have comprehensive insurance, your car is completely uninsured against auto theft. Even if you do, there are limits on how much you can collect. Your policy payout will be based on the actual cash value of the car, and if you've had it a few years, that may not be much. If you have a deductible on your comprehensive, you're going to get even less money back from your insurer.
- Clark: 12 Things Your Homeowners Insurance Probably Doesn’t Cover
- Nolo: Buying Insurance for Your Car
- Nationwide: Car Insurance and Theft
- Insurance.com: Personal Property Insurance: Why You Need It and How to Pay Less
- Bankrate: Insurance for Your Stuff Placed in Storage
- Allstate: Comprehensive Coverage
- Cash Money Life Financial Freedom: When Should You Drop Full Coverage Auto Insurance To Just Liability?
- Lemonade: Homeowners Insurance, Explained
A graduate of Oberlin College, Fraser Sherman began writing in 1981. Since then he's researched and written newspaper and magazine stories on city government, court cases, business, real estate and finance, the uses of new technologies and film history. Sherman has worked for more than a decade as a newspaper reporter, and his magazine articles have been published in "Newsweek," "Air & Space," "Backpacker" and "Boys' Life." Sherman is also the author of three film reference books, with a fourth currently under way.