A car is an expensive possession for many people, so it can be a traumatizing experience to have it stolen, especially with electronic devices and other valuables inside. It can also be quite inconvenient if you require a vehicle for daily travel. It can be reassuring to an extent to have comprehensive insurance coverage for this unforeseen event since it can enable you to receive enough funds from the insurance company for a replacement. Sometimes, however, you may have your stolen car insurance claim denied by the insurance company, which can put you in a difficult position.
Why Would an Insurance Company Deny a Stolen Car Insurance Claim?
Along with being mandatory for drivers in the United States, car insurance can be a safeguard for many unforeseen events such as collisions, injuries, vehicle vandalism, and car theft. The latter comes under comprehensive coverage, which requires the insurance company to compensate you for the value of the stolen vehicle. The insurance company may have a waiting period to ascertain whether the police can recover your car before it pays you the insurance payment.
Unfortunately, in some cases, the insurance company could deny the stolen car insurance claim. That might happen for any of the following reasons:
1. Your Insurance Policy Has Lapsed
A single missed insurance premium payment can negatively impact your insurance coverage. Even if you have been up-to-date on your premium payments for years, one or two missed payments could lead the insurance company to suspend your car insurance coverage. It will not reinstate it until you pay the missed policy payments. In this period, if your vehicle gets stolen, the insurance company will deny your claim.
2. Your Insurance Policy Does Not Cover Theft
Not all car insurance policies cover car theft. States that require car insurance only require liability coverage, which does not cover theft. So, if your car gets stolen, and you only have liability insurance, the insurance company is well within its legal rights to deny your insurance claim. That is why it is important to check what kind of policy you are buying and be aware of the coverage it offers.
3. Your Insurance Policy Does Not Cover Commercial Use
A standard insurance policy for personal use may not cover commercial use, such as using it for delivering goods or for ride-sharing programs. So, if your vehicle gets stolen while in use for business purposes not covered by the policy, the insurance company is well within its legal rights to not approve your insurance claim. It is advisable to check with the insurance company and get a policy that allows commercial use if you intend to use the vehicle for business purposes.
4. You Were Reckless or Irresponsible With the Vehicle
The insurance company may deny your stolen car insurance claim if they think your reckless or irresponsible behavior facilitated the car theft. For example, you might be in the habit of leaving the car keys in the car and the car door unlocked. You might have parked the car in a high-crime neighborhood. You might have lent the car to an untrustworthy acquaintance or stranger.
5. You Drove Under Influence
It is illegal in the United States to drive while you are intoxicated or under the influence of drugs. If you forget your keys in your car in such a state or there is some other event while you are driving under influence and the vehicle gets stolen, the insurance company is likely to deny your stolen car insurance claim. You will have to bear the expenses yourself, plus face legal issues for driving under the influence.
6. You Failed To Inform the Insurance Company of Your Car’s Increased Worth
Before the car theft incident, you may have increased the vehicle’s value by customizing or modifying it. As per most car insurance policy terms, it is essential to inform the insurance company of the changes in the vehicle and how these increase its value. The insurance company can then require you to pay a higher monthly premium on the revamped vehicle. Failing to inform the insurance company of the higher value car alternations could lead it to keep the insurance payments to the original valuation or refuse to make the payments in case of car theft.
7. You Provided Misleading Personal Information
It is essential to provide accurate personal information when you buy a car insurance policy. If any of the details change later, you should inform the insurance company and have them update these. A failure to do so might be seen as a deliberate attempt to commit fraud. For example, if you fail to disclose your current address, and your location affects the price of the premium, the insurance company might assume that you did it to obtain a premium discount. They might deny your claim in the case of car theft.
8. You Allowed an Unauthorized Driver To Use the Car
When you get the car insurance policy, the insurance company may require information about the family members who will be using the vehicle. If you allow unauthorized people to use the car and it gets stolen while in their charge, the insurance company can deny your claim. That will leave you liable for the loss.
9. You Filed a Fraudulent Claim
If you exaggerated the value of your stolen vehicle or the valuables in it or pretended the vehicle was stolen when it was not, you will have filed a fraudulent claim. The insurance company may discover the fraud and reject your claim. Aside from that, you may find yourself sued for committing a felony.
What To Do After Your Car Is Stolen?
You may be less likely to have your stolen car insurance claim denied by the insurance company if you do the following after the car theft incident:
- Inform the police immediately about the car theft since a police report is proof that someone stole your vehicle
- Contact the insurance company and submit a stolen car insurance claim
- Meet with the insurance company investigator to determine the value of your stolen car
What To Do If An Insurance Company Denies Your Stolen Car Insurance Claim?
If you have your stolen car insurance claim denied by the insurance company, you have the following options:
- Submit a complaint to your state’s insurance department about wrongful denial of the claim or inadequate compensation
- Hire an insurance bad faith attorney on a contingency basis and sue the insurance company for breach of contract
A stolen car is a huge frustration on its own and a situation one hopes never to have to deal with. But knowing what to do in such a situation and how your insurance coverage support you can help avoid a denial of your claim.
At FIXD, our mission is to make car ownership as simple, easy, and affordable as possible. Our research team utilizes the latest automotive data and insights to create tools and resources that help drivers get peace of mind and save money over the life of their car.