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Dropping full coverage has consequences


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Question: I had full coverage on my vehicle for years but recently changed it to liability-only insurance coverage when I got another vehicle. This vehicle has now been stolen. Is there anything that says if I changed my car insurance policy within the prior 45 days that I still may be covered? Or am I just out of a car?

Answer: Once you remove full coverage from your vehicle, it’s gone.  When you change your car insurance policy -- add or remove coverages, drivers or vehicles -- the change typically takes effect immediately.

This means there is no remaining physical damage coverage for you to file a claim for your stolen car.

A change to an auto policy is referred to as an endorsement.  Endorsements are normally done by your auto insurance provider in real time, unless you specifically request a different certain time and date for it to be changed.  In many cases, you can choose any time between now and the next 14 days for the changes to take effect. 

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With certain car insurance companies, it may take until the next business day for the request to be fully processed.  In such a case, the endorsement will still go into effect on the date and time you requested, but that it may not be reflected on your policy or the company’s system until the next business day (with a notation of the request/effective date).

In any case, your full coverage should have been removed long before 45 days had passed and your vehicle was stolen.  There are no special exceptions that consumers get for events that happen after coverage changes occur.  It’s just bad luck that after years of having full coverage that your car is stolen less than two months after you dropped it.  (See “Is it time to drop comp and collision?”)

You can, however, contact your car insurance company if you feel the need to double-check what coverages you had at the time of the theft.

Most car insurance carriers now give you the ability to check your policy online.  I’d, thus, recommend reviewing your policy to see if your change to liability-only coverage is shown and then speak to an agent if you have questions.

Comprehensive coverage is what would have covered your stolen vehicle if you still had full coverage.  As you’re aware, a liability-only policy doesn’t cover your vehicle in any way.

Comprehensive coverage pays out actual cash value (ACV) if your vehicle isn’t recovered or if it’s recovered but declared a total loss due to damages the thief inflicted upon it.  Comprehensive also pays out for repairs if a stolen vehicle is recovered and damaged but not to the point where it would be totaled out.

In case the idea has crossed your mind, there is no way to place comprehensive coverage back on your car retroactively so that you could have coverage for the theft. 

Regrettably, this leaves you out a car and with no way to obtain compensation for it unless the thief is found.  There is the possibility that law enforcement will find your vehicle.  We hope that happens.

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