Theft Coverage in Auto Insurance Policies
Motor vehicles are valuable items of personal property that can be readily moved from one place to another if they come into the possession of persons other than their rightful owners or operators. They are highly useful in an intact condition, and they can also be disassembled in order to obtain and sell their component parts. As a result, thefts of cars and trucks occur in large numbers in the United States. Theft coverage in auto insurance policies has been devised as a means of protecting the owners and operators of motor vehicles from the economic losses caused by auto theft.
Theft coverage under a policy of motor vehicle insurance, which is sometimes found within a policy’s comprehensive coverage, generally consists of policy provisions under which an insurer agrees to pay an insured for loss of or damage to a covered vehicle caused by theft or larceny. Because of the great variety of ways in which the lawful owner or operator of a car or truck can be deprived of its possession, a number of legal issues may be implicated when a claim is made under such a theft coverage provision. One such issue is whether the definition of “theft” for purposes of policy coverage is limited to or coextensive with the definition of that term under the criminal law, a definition that may arguably serve to limit the types of losses for which recovery may be had under the policy. Other questions of coverage may be raised in situations where a vehicle simply disappears, is never recovered, and the manner of its disappearance remains a mystery, or where a vehicle is taken from the possession of its owner or operator by a prospective purchaser, by a person given permission to drive the vehicle, by an employee or agent of the vehicle owner, or by a person who acquires possession of the vehicle through a purported purchase paid for with a bad check or transacted by other fraudulent means. Questions of the coverage afforded to personal property stored in a vehicle at the time of a theft, or to items of vehicle equipment, may also arise.
The business of insurance in the United States, including that of motor vehicle insurance, has traditionally been governed by the separate laws of each of the states rather than by a single unified body of federal law. As a result, the answers to questions about theft coverage under auto insurance policies will vary from state to state, and will be found in the state statutes regulating the business of insurance and in the decisions of courts dealing with issues of insurance law.