How Does Theft Risk Impact Car Insurance Premiums?

How Does Theft Risk Impact Car Insurance Premiums

Theft Risk

How does theft risk impact car insurance premiums? With the average price of a new car sold in the United States now topping $33,500 as of May 2014 (according to Kelley Blue Book) and almost 700,000 cars stolen annually, the cost of theft to insurance companies is no small matter. Where you live, how you store your car, the anti-theft measures you take, and the type of car you own can all have an impact on your risk of automobile theft and your insurance premiums.

Theft (and the related peril vandalism) are covered by the Comprehensive coverage section of your auto policy, if you buy it.

How Does The Risk Of Auto Theft Vary Based Upon Where You Live?

The risk of theft of your vehicle varies tremendously based upon where you live. According to FBI statistics from 2013, on average across the nation, one in 351 vehicles are stolen each year.   The worst metropolitan area in the country for 2012 was Bakersfield, California, where 1 in 138 vehicles was stolen (2.5 times the national average). In areas with high theft, your comprehensive premium will be higher.

Vandalism: Much like theft, vandalism varies tremendously based upon where you park your vehicle.   Certain towns are much worse than others. In general, the risk varies similarly to crime risk. In areas prone to higher vandalism incident rates, your comprehensive premium will be higher.

In areas with high incidence of crime, the comprehensive coverage charge on your insurance policy can be several hundred dollars, or more.

Attractiveness To Thieves: Certain cars are more prone to theft than others due to either the value of the car or the demand for parts. Vehicles like the Toyota Camry, Honda Accord, and Honda Civic often make “most stolen vehicle” lists. Because so many of them are on the road, the demand for their parts is high, thus making them attractive to thieves.   Often times, the value of the parts, sold individually, can far exceed the market value of the car. High valued vehicles, like certain brand names or convertible-style cars, are also targeted by thieves. When rare and exotic cars are stolen, they often are shipped outside the country for sale.

It is important to note that you can’t prevent vehicle theft, you can only deter would-be thieves and make it more likely that your vehicle is recovered.   If someone is truly intent on stealing your vehicle, they will likely find a way.

What Can I Do To Reduce The Chances Of Vehicle Theft?   Are There Premium Discounts I May Be Eligible For?

First of all, it is important to understand that theft is a “crime of opportunity.”   The easier your car is to steal, the more attractive it is to a would-be thief, and the more likely it is to get stolen. Vehicles are most often stolen for one of three reasons: 1) for a short joy ride or immediate transportation to a particular place; 2) to be broken down into parts in a “chop shop” with the parts to then be sold for profit; 3) to be resold to others, often to buyers outside of the country.

There are a number of steps you can take to safeguard your vehicle. Any one of these will make your vehicle less attractive to would-be thieves.

Locking Your Vehicle: The first line of defense is locking your vehicle, rolling up the windows, closing the sunroof, and (if your vehicle is a convertible) making sure that the top is up. It takes less time to steal a vehicle that is unlocked.   Shockingly, according to the National Insurance Crime Bureau, more than 50% of stolen vehicles were not locked at the time of their theft, and many of them actually had the keys in the ignition or were left running. Leaving your car running or with the keys in the ignition is not a good idea.

Street Parking Vs. Garage Parking: Vehicles parked in the street are more likely to be stolen than vehicles parked in a secure area. Some insurance companies provide a substantial credit for vehicles that are parked in garages or secure facilities vs. on the street. If you live in a high crime area, and have access to secure parking: a) take advantage of that secure parking; b) make sure your insurance agent knows about the secure parking so she can try to get you a discount.

Park In Well Lit Areas: If you do not have access to secure parking, then you should try to park your vehicle in a well lit area.   A thief is less likely to target a vehicle that is well lit as it is more likely that he will be noticed in the act.   Similarly, a vehicle in an alley may be at higher risk of theft than a vehicle parked in the street.   When thinking about where to park your vehicle, think about how likely it is that a thief will be noticed while in the act of stealing your car.

Vehicle Alarms: If you live in a high crime area, you may wish to consider having an alarm or vehicle tracking device installed in your auto. These devices act as a deterrent to theft and make it more likely that you will recover your vehicle when it is stolen. Devices range from simple audible alarms to more sophisticated devices (like Lo Jack and On-Star) that disable your vehicle, alert central station monitoring facilities, and enable the tracking of your vehicle’s location using GPS devices. Some drivers also place stickers on their cars that warn about the alarm system or tracking device.   These warning decals may cause would-be thieves to target a different vehicle.

Many insurers offer significant discounts for such devices.   If you have such a device, make sure your insurance agent knows about it so you can get the discounts that you qualify for.   Of course, if you have an alarm, you should also use it.

Register Your Car For The “Watch Your Car Program:”   The “Watch Your Car” program is a Federal program to help prevent vehicle theft.   It is a cooperative program between the Federal Government and the States.   When you register for the program, you are given a decal to place on your car.   If law enforcement sees your car driving on the road between the hours of 1 AM and 5 AM, and they see the Watch Your Car Program Decal, they are supposed to pull it over to validate that the driver is the rightful owner.   Some insurers provide discounts for participation in this program. If you participate, tell your insurance agent about it.   Click Here for a fact sheet on the program.

Immobilization Devices: If you live in a high crime area, you may want to consider usage of the various vehicle immobilization devices that are available:

  • Steering Wheel Locks:   Steering wheel locks, such as “The Club” usually cost less than $50 and can deter thieves from targeting your vehicle;
  • Tire Boot/Wheel Lock Devices: Tire locking devices (boots) usually cost $150 or less and can dissuade would-be thieves from targeting your vehicle;
  • Brake & Clutch Locks: Similarly, locking devices for your brake or clutch pedal (also usually less than $50) can help deter thieves;
  • Hidden Kill Switches: You can have a hidden kill switch installed in your vehicle that disables the ignition wiring.   A hidden kill switch kit usually costs less than $25 to buy.   Ask your car mechanic about installation charges for this option that makes it much more difficult for a thief to hot wire your car;
  • Smart Keys – Similarly, smart keys with built in computer chips can make it more difficult for thieves to steal your car. If your car does not already have one of these, you may want to talk to your dealer or mechanic about the cost of installing one.   This is one of the pricier ways to go as adding a smart key system to a vehicle can cost hundreds of dollars;
  • VIN Etching is a theft deterrent process where the vehicle identification number of the vehicle is etched into each of the vehicle’s windows (and sometimes other places as well). It is done in a manner where it is not that noticeable to the owner. Usually, the owner will attach a decal to the car that prominently states “This Car Protected By VIN Etching” or something similar. VIN etching makes a car less desirable to would-be thieves because it makes it more difficult to sell the car. Any actions that make it easier for people to identify a vehicle as stolen helps to deter would be thieves. Many insurers offer a discount for VIN etching.   VIN etching not only reduces the chances that your vehicle is stolen, but also increases the post theft odds of vehicle recovery. While dealers may charge $400 or more for VIN etching, do it yourself kits are available for as little as $25.
  • Locking Rims: In high crime areas, thieves often steel the tires and rims off of vehicles.   Utilization of locking nuts on your rims can help to deter such thefts.

What Are The Chances That My Stolen Vehicle Is Recovered?

In August of 2013, Progressive Insurance released their claims data on the percentage of stolen vehicles that were recovered.   Overall, their recovery rate was 46 percent. However, the recovery rate varied tremendously based upon where the vehicle was stolen.   In Michigan, the recovery rate was only 19%.   At the other end of the spectrum was Washington State, where the recovery rate was 71%.   A number of the theft deterrence measures outlined above will decrease the odds of your vehicle being stolen and increase the chances that it is recovered.

Lo Jack, for example, advertises a 90% recovery rate for vehicles stolen with their system installed, and vehicles with OnStar activated are said to have a recovery rate of 76%.

What Should I Do If I Suspect That My Car Has Been Stolen?

First, call your local police department.   Be ready with information as they may ask for your vehicle’s VIN, make, model, year, color, and anything that is unique about your vehicle.   When you call your local police, you will want to check to see if your vehicle was towed or impounded as opposed to being stolen.

If it was stolen, the police department will have you complete a report.

If your vehicle is equipped with LoJack, OnStar or a similar service, you should quickly contact the service to report a suspected theft, determine your vehicle’s location, and potentially utilize any remote vehicle disabling services.   When you call the police, you will want to tell them that you have such a service as the police may wish to coordinate their activities with your vehicle monitoring services provider.

Lastly, you will want to notify your insurance company and, if financed, the company who financed your vehicle.   If you had any personal information in your vehicle such as your wallet or purse, you may need to take further steps to protect your credit, protect your identity, and cancel your credit and debit cards.

Preventing Theft Of Personal Items From Your Vehicle

Of course, not leaving items of value in your car is the best way to go, and many of the vehicle theft deterrents outlined above will also deter theft of personal property from your vehicle. If you do leave personal items in your vehicle, here are a few tips:

  • Use Your Trunk Or Storage Compartments: Thieves are less likely to go after that which they can’t see.   Theft is most often a crime of convenience. By placing items of value in a glove compartment, storage bin, or locked trunk, you remove the items from view. However, in places like beach parking lots and health club parking lots, thieves know that people often leave their wallets and other valuables in their vehicles.   Cars in such places are often targeted for break-ins. In such places, it is advisable not to leave any valuables in your car, even if they are hidden from view.
  • Don’t Tempt The Would-Be Thief: Avoid leaving things like jackets, suit coats, backpacks, portfolios, and suitcases in view.   Even if they do not have valuables in them, would be thieves may assume that there are valuables therein.
  • Don’t Leave A Garage Door Opener In View:   A visible garage door opener is an invitation to the serious thief, particularly when your car is parked in your driveway. The thief knows this could provide access to a wealth of riches in your home.
  • Avoid Hiding Items While You Are At A Parking Lot:   Thieves often watch parking lots. If you get out of the car with your purse in hand and then stow the purse under the back seat, the would-be thief may see you perform this ritual.

This article summarizes a number of the actions you can take (or avoid) to help deter theft of your vehicle or theft from your vehicle.   A number of the actions covered herein could entitle you to discounts on your comprehensive coverage with your auto insurer.   Make sure you talk to your insurance agent about the anti-theft discounts you may qualify for.   You should also take the time to see if there may be other discounts that you qualify for.

Other Enhanced Insurance articles related to Insurance Premiums:

How Will Driverless Technology Impact My Auto Insurance Premiums

Will an Increase in Gas Price Impact Car Insurance Premiums?

How Does Gender and Age Impact Car Insurance Premiums

How Does Driving Record Impact Car Insurance Premium

How Does Vehicle Location Impact Car Insurance Premium

What Is A Car Insurance Premium

How Does a DUI or DWI Impact Car Insurance Premiums

How Does a Newly Licensed Driver Impact Car Insurance Premiums?

Enhanced Insurance is not written by attorneys. If you’re looking for legal advice, you need to contact a lawyer. Further, insurance practices and forms change constantly and are varied from state to state. For definitive answers in your area, contact a local agent.

While the majority of people want an agent involved in their purchase of insurance, many people want to see if they can save money by buying direct from the insurance company. Others want to try a direct quote to make sure the premium they’re now paying through their local agent is fair. If you want a quote for your coverage, click on the competitive quote button on the right side of this page.

Jim Ketterson is an insurance expert with more than 25 years of experience in the industry. He has served as a President of an insurance company, an insurance underwriter, and has held various roles in insurance company product management. He has his Chartered Property Casualty Underwriter designation and a MBA in Finance. The information he offers in his posts is general in nature and may not be appropriate, accurate, or applicable in all situations. Before making any important insurance decisions, you should seek the advice of a qualified insurance agent and discuss the particulars of your individual situation. Follow Jim on Twitter @MNinsurancePro

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