What Happens When Your Leased Car Is Stolen

Published on
May 2, 2023

One of the most stressful experiences that can happen to anyone is car theft. For those of us who have leased vehicles, the situation can become even more complicated as it involves both the insurance company and the leasing company.

In this in-depth blog post, we'll explore the steps you need to take when your leased car is stolen, how car theft may affect your lease agreement, and how insurance coverage and GAP insurance can help safeguard you from potential financial loss.

The Reporting Process and Insurance Claims

The first and most important step when you find out that your leased car has been stolen is to immediately report the stolen vehicle to the police. Contact the police and file a police report, providing all relevant details about the car, such as its make, model, color, and license plate number.

Contacting Your Car Insurance Company

After reporting the theft to the police, you’ll need to contact your insurance company immediately and inform them of the theft. As a lessee, you're obligated to pay for the remaining lease balance—even if the car is stolen.

Since you're required to carry full coverage auto insurance, which typically includes comprehensive coverage for theft, your insurance company will be your ally in the claims process. Full coverage auto insurance usually covers the value of the leased vehicle if it isn't recovered within a certain timeframe (often around 30 days). If the car is never recovered, the insurance can cover your entire lease balance, allowing you to consider another lease or auto loan.

Filing a Claim and Claim Investigation

During the claim investigation process, your insurance company will conduct an auto theft investigation to verify the incident. You may be asked to provide additional information or documents, such as the police report and proof of the last location where the car was parked. Cooperation and transparency are key to ensuring a smooth claims process.

And always keep a copy of any original documents just in case. Having a paper trail helps keep all parties involved accountable and helps you throughout the process.

Insurance Coverage and GAP Insurance

While comprehensive insurance pays out the vehicle's value at the time of the theft, it may not always be enough to cover the entire lease balance if your vehicle's value has depreciated quickly.

Understanding GAP Insurance

In instances where comprehensive insurance for a leased vehicle does not cover the outstanding balance owed to the leasing company, GAP (Guaranteed Asset Protection) insurance serves as a valuable financial safeguard. GAP insurance is specifically designed to address the difference between the current market value of a vehicle and the remaining balance on its lease agreement.

As an example, consider a scenario where a leased vehicle has a current market value of $15,000, yet the lessee still owes $16,000 on the lease. In this situation, while comprehensive insurance would provide coverage for the vehicle's market value, GAP insurance would offer additional coverage for the $1,000 difference. And in the event that the vehicle is stolen or deemed a total loss, lessees with GAP coverage aren't required to contribute additional funds if their comprehensive insurance does not fully cover the lease balance. GAP insurance plays a necessary role in providing financial security to lessees in stressful situations, like when their vehicle gets stolen.

Next Steps: Buy or Lease Again?

If your leased vehicle was stolen and you need another car, you're faced with a decision: buy or lease again? Leasing may not be for everyone, as most leasing companies have higher credit score requirements. If you have poor credit or prefer to avoid mileage restrictions and leasing fees, buying could be for you. On the other hand, if you appreciate driving a new car every few years and enjoy lower monthly payments, leasing may be the right choice. However, when you make the decision, make sure you’re aware of the process for filing a claim if the vehicle gets stolen.

It’s a stressful moment

While the experience of having your leased car get stolen can be stressful, understanding the reporting process and insurance claim process is crucial to navigating the situation effectively. Make sure to have the right insurance coverage in place, including GAP insurance, to protect yourself from financial losses. Additionally, be proactive in reporting the theft and working with your insurance company to file a claim.

For those who wish to take extra precautions to protect their leased vehicles from theft, a variety of anti-theft devices are available online. Check out our blog post, "The Best Types of Anti-Theft Devices for Cars in 2023", to explore all of the options.

With the right knowledge and preparation, you can reduce the impact of vehicle theft and move forward with confidence.

About the Author: This article was crafted by the LOOP Marketing Team. Comprising of seasoned professionals with expertise in the insurance industry, our team is dedicated to providing readers with accurate, up-to-date, and valuable information. At LOOP, we're passionate about helping families navigate the world of car insurance, ensuring they get the best coverage at the most affordable rates. Learn more about our mission and values here.

For more insights on auto insurance and other related topics, visit our blog.

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