How car theft affects your car insurance costs

Gina Roberts-Grey

Vehicle theft is the country’s top property crime, according to the National Insurance Crime Bureau. On average, a car is stolen every 26 seconds, totaling about 1.2 million cars stolen every year. The nonprofit bureau, which investigates potential insurance fraud, says about 62 percent of cars stolen are recovered – although often with major damage.

But living in the state with the lowest number of car thefts, Vermont, doesn't automatically result in lower car insurance premiums. On the flip side, living in a state with a high number of car thefts, such as California, doesn't automatically translate into higher car insurance premiums.

The car theft connection

Experts say there's little to no correlation between lower car theft rates and car insurance rates. Even if your state boasts a low rate of car thefts, like Delaware, your rates might still be on the high side.

“There are a lot of factors that go into car insurance rates; theft is only one of them,” says Jerry Diamond, executive vice president of Independent Insurance Agents of South Dakota, a trade group.

Among the many factors that go into calculating your car insurance premium are your age, gender and driving record.

Diamond says one factor that contributes to South Dakota’s low car insurance rates is the small population. “It’s a large state with only 800,000 people. That means fewer cars, so less traffic to get in an accident with,” he says.

It's worth noting that South Dakota does boast a small number of car thefts.

Covering car theft

Car theft is covered under the comprehensive portion of your car insurance policy. So as long as you carry comprehensive coverage, a claim for a stolen car, or damage resulting from car theft, should be covered.

However, comprehensive coverage may not be enough to get a new car, says Eli Lehrer, president of the R Street Institute, a free-market think tank.

“A standard policy covers replacement costs of a vehicle, but in many cases cars more than 10 years old aren’t worth more than a few thousand dollars," Lehrer says. "So after a deductible is paid, the driver may end up with little or nothing.”

Lehrer says drivers can buy additional "original value" coverage, but even this probably won't be quite enough to replace your car, as car prices tend to go up as time goes by.

Are car thefts declining?

In 2010, car theft rates dropped for the eighth consecutive year nationwide. And it’s expected that 2011 will follow suit. “The 2011 numbers are not yet final, but they are expected to be down yet again,” says Frank Scafidi, a spokesman for the National Insurance Crime Bureau.

What's behind the decline?

“New vehicles are more difficult to steal than they were a few years ago because of theft prevention technology features on cars and theft detection technology like … license plate readers,” Scafidi says.

And car thieves might have gotten bored.

“Even though it’s tough to prove statistically, it’s possible that many of the thieves that used to steal cars, when it was a very easy thing to do, may have moved on to other kinds of pastimes,” Scafidi says.

Although national car theft numbers are heading downward, Scafidi says drivers must be vigilant about preventing theft. “There is always a black market for items obtained by theft, and vehicles remain popular theft targets,” he says.

The National Insurance Crime Bureau provides these four steps for protecting against car theft:

1. Use common sense. Don’t give thieves an easy way into your car. When your car is parked, never leave the doors or rear hatch unlocked, the keys in the ignition or car, or the windows open.

2. Be alarmed. Always activate the car alarm or other anti-theft devices, like steering wheel locks, every time you leave the vehicle -- even if you’re just running in to pay for gas. Apply theft deterrent decals to windows to warn thieves you’re ready for them.

3. Prevent hot-wiring. Thieves can bypass your ignition by tampering with the car’s wiring located under the steering wheel. The bureau says installing a vehicle immobilizer system like a kill switch can reduce the risk of hot-wiring.

4. Add a GPS-enabled device. If your car is stolen, you can instantly track your car by sending a signal to the police or a monitoring service. That way, you're able to find your car -- intact -- within hours, rather than days later, after it’s been stripped for parts and abandoned.

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