III - Auto Theft

ISSUES UPDATES

Auto Theft

THE TOPIC

APRIL 2009

Auto theft is covered under the comprehensive section of an auto insurance policy. Theft coverage applies to the loss of the vehicles as well as parts of the car such as air bags. Comprehensive coverage, which is not mandatory, also pays for fire, vandalism and weather-related damage including damage from flooding and earthquakes.

Premium rates for comprehensive insurance are affected by the risk of loss, meaning the likelihood that an insured car will be stolen or damaged, and also the car’s value at the time of the loss. The dollar size of claims has been going up, reflecting the higher value of new cars on the road, the value of the cars that are targets for theft or are damaged and the cost of vehicle bodywork. Vehicle bodywork costs include replacing stolen components. Nationally, more than 75,000 airbags are stolen every year.

According to the Federal Bureau of Investigation, the number of U.S. motor vehicle thefts decreased by 8.1 percent from 2006 to 2007, the fourth consecutive annual decrease. In 2007 the value of stolen motor vehicles was $7.4 billion. The average value of a motor vehicle reported stolen in 2007 was $6,755.

KEY STATISTICS

2007 Theft Statistics: According to the Federal Bureau of Investigation's (FBI) Uniform Crime Reports, a motor vehicle is stolen in the United States every 28.8 seconds. The odds of a vehicle being stolen were 1 in 210 in 2006 (latest data available based on registrations from the Federal Highway Administration, thefts from the FBI and calculated by the Insurance Information Institute). The odds are highest in urban areas.
U.S. motor vehicle thefts fell 8.1 percent in 2007 from 2006, according to the FBI's Uniform Crime Reports. In 2007, 1,095,769 motor vehicles were reported stolen.
In 2007 the southern states accounted for the largest share of thefts—36.4 percent, followed by the West, 35.7 percent. The Midwest accounted for 18.2 percent of thefts and the Northeast for 9.8 percent.
Nationwide the 2007 motor vehicle theft rate per 100,000 people was 363.3, down 8.8 percent from 398.4 in 2006. The highest rate was reported in the West, 557.4, down 11.8 percent from 632.1 in 2006. The rate of motor vehicles stolen was 360.9 in the South, down 4.6 percent from 2006; 300.4 in the Midwest, down 9.7 percent; and 195.7 in the Northeast, down 11.9 percent.
Only 12.6 percent of thefts were cleared, either by arrests or by exceptional means, in 2007.
Insurance Premiums: The average comprehensive insurance premium in the U.S. fell 3.3 percent from $145.16 in 2005 to $140.38 in 2006 (the most recent data available), according to the National Association of Insurance Commissioners.
Carjackings: Carjackings occur most frequently in urban areas. They accounted for only 3.0 percent of all motor vehicle thefts, based on Department of Justice data from 1993 to 2002 (latest available).

RECENT DEVELOPMENTS

2008 Theft Statistics: According to the National Insurance Crime Bureau (NICB), preliminary 2008 crime data released by the FBI in January 2009 indicate that 2008 will be the fifth consecutive year of declines in motor vehicle theft. The NICB says that motor vehicle theft fell 12.6 percent from 2007 to 2008, the largest single-year percentage decrease since 1999.
Thefts By City: According to an NICB study released in April 2009, the Modesto, California, Metropolitan Statistical Area (MSA) had the highest rate per capita for vehicle thefts in the nation in 2008. Six of the top 10 U.S. MSAs for vehicle theft in 2008 were in California, as shown below:

TOP TEN U.S. METROPOLITAN AREAS WITH
HIGHEST MOTOR VEHICLE THEFT RATES, 2008

Rank	Metropolitan Statistical Area	Vehicles stolen	Rate (1)
1	Modesto, CA	4,235	829.26
2	Laredo, TX	1,960	827.21
3	Yakima, WA	1,828	779.32
4	San Diego-Carlsbad-San Marcos, CA	22,554	751.53
5	Bakersfield, CA	5,918	739.33
6	Stockton, CA	4,963	738.12
7	Las Vegas-Paradise, NV	13,662	732.25
8	Albuquerque, NM	6,182	730.81
9	San Francisco-Oakland-Fremont, CA	30,735	719.03
10	Fresno, CA	6,533	718.58
(1) Ranked by the rate of vehicle thefts reported per 100,000 people based on the 2008 U.S. Census Population Estimates. Source: National Insurance Crime Bureau.

A survey conducted in April 2007 on behalf of the National Insurance Crime Bureau (NICB, https://www.nicb.org ) and LoJack, a manufacturer of an electronic vehicle tracking and recovery system, found that almost four out of five Americans (79 percent) always lock their vehicles and that nine out of ten (93 percent) never leave spare keys in their vehicle. However, a third admit they have left their car while it was running, which makes the vehicle an easy target for theft. The survey also found that 47 percent of Americans don’t always park in a well-lit area and 40 percent don’t hide their valuables. In fact, nearly half leave mail in their vehicle, a quarter have left a purse or wallet, and almost a third have left bank statements, all of which can put them at risk for identity theft. Although 75 percent of respondents know that there are costs associated with vehicle theft in addition to paying the insurance deductible and the cost of replacing the vehicle that are not covered by insurance, virtually none (one percent) knew that there are additional costs such as insurance premium increases, the cost of time spent dealing with police, vehicle rental costs, and the cost of time off from work. The survey was conducted by Opinion Research Corporation.
Thefts By Model: The NICB says that the 1995 Honda Civic was the most stolen vehicle in 2007, the same as in 2006. The 2007 report confirms that theft of older vehicles has remained constant for the past several years. Eight of the vehicles on the top 10 list shown below are 10 or more model years old. These cars have been consistent top sellers for many years and some of their parts are interchangeable. Thieves dismantle them for their components. The NICB compiles its list using National Crime Information Center data, which is based on police reports.

TOP TEN MOST FREQUENTLY STOLEN PASSENGER VEHICLES, 2007

Rank	Year, make, model
1	1995 Honda Civic
2	1991 Honda Accord
3	1989 Toyota Camry
4	1997 Ford F-150 Series Pickup
5	1994 Chevrolet C/K 1500 Pickup
6	1994 Acura Integra
7	2004 Dodge Ram Pickup
8	1994 Nissan Sentra
9	1988 Toyota Pickup
10	2007 Toyota Corolla
Source: National Insurance Crime Bureau.

According to the NICB, California has the highest vehicle thefts in the United States.

TOP TEN STATES FOR VEHICLE THEFT, 2007

Rank	State	Vehicles stolen
1	California	219,392
2	Texas	93,899
3	Florida	73,656
4	Arizona	48,389
5	Georgia	42,594
6	Michigan	42,151
7	Washington	37,622
8	Illinois	33,887
9	Ohio	33,779
10	Maryland	28,393
Source: Natonal Insurance Crime Bureau.

MOTOR VEHICLE THEFT IN THE UNITED STATES, 1998-2007

Year	Vehicles stolen	Percent change
1998	1,242,781	-8.2%
1999	1,152,075	-7.3
2000	1,160,002	0.7
2001	1,228,391	5.9
2002	1,246,646	1.5
2003	1,261,226	1.2
2004	1,237,851	-1.9
2005	1,235,859	-0.2
2006	1,192,809	-3.5
2007	1,095,769	-8.1
Source: U.S. Department of Justice, Federal Bureau of Investigation, Uniform Crime Reports.

Motorcycle Theft: The National Insurance Crime Bureau (NCIB) reports that the number of motorcycle thefts in the United States has declined each year from 2006 to 2008. Based on data from the National Crime Information Center of the Federal Bureau of Investigation, motorcycle thefts fell from 63,828 in 2006 to 60,763 in 2008, a 4.8 percent drop. The NICB’s March 2009 report also details the seasonal nature of motorcycle thefts. More motorcycles are stolen during warm months—July and August had the most motorcycle thefts from 2006 through 2008 while December, January and February had the least. Over the three-year period, motorcycles made by Honda, Yamaha and Suzuki were the most frequently stolen. California had the most motorcycle thefts in 2008. The top 10 states are as follows:

TOP TEN STATES FOR MOTORCYCLE THEFTS, 2008

Rank	State	Motorcycles stolen
1	California	7,125
2	Florida	5,992
3	Texas	5,573
4	North Carolina	3,174
5	Indiana	2,223
6	South Carolina	2,152
7	Maryland	2,006
8	Ohio	1,854
9	New York	1,851
10	Georgia	1,701
Source: National Insurance Crime Bureau.

The NICB also noted that from 2006 to 2008 the average stolen motorcycle recovery rate was 36.2 percent. This is much lower than the 65 to 70 percent rate typical for automobiles, mostly because criminals can easily alter, reuse and camouflage motorcycle parts and frames. Stolen motorcycles can be sold whole, stripped down in chop shopsfor parts resale or reconstruction into another motorcycle, or exported. Besides using common sense tactics such as parking in well-lit areas and removing keys, motorcycle owners can get a $50 rebate from the manufacturer for purchasing LoJack, an electronic recovery system that enables a motorcycle to be tracked by local police through a radio transceiver hidden on the motorcycle. In 16 states one of the largest motorcycle insurers offers a 20 percent discount on the comprehensive portion of motorcycle insurance for riders who purchase the system.

BACKGROUND

Federal Antitheft Legislation: Federal intervention to combat car theft began in 1919 with passage of the Dyer Act, which made interstate transportation of stolen vehicles a federal crime. In 1984 Congress passed the Motor Vehicle Theft Law Enforcement Act, which toughened penalties by bringing theft of vehicle parts under federal racketeering statutes and by imposing heavy fines and prison terms for violations of export laws. It also required manufacturers to stamp identification numbers on major car components, making it easier to trace parts taken from vehicles stolen for dismantling.

The Act also required that vehicles be made available for inspection prior to export and expanded U.S. Customs officials' powers of inspection and arrest in response to the growing international nature of motor vehicle theft. Cars and car parts stolen in the United States often wind up on overseas markets. Insurers or their designated agents are required to inform the Secretary of Transportation of vehicle theft and recovery and of rating data used to set insurance premiums for motor vehicles.

Another 1984 federal law made it a federal offense to counterfeit or forge motor vehicle title certificates. In 1985 the Department of Transportation required that 14 major vehicles parts be inscribed with a 17-digit vehicle identification number (VIN).

The Anti-Car Theft Act, enacted in 1992, made armed auto theft, known as "carjacking," a federal crime. In 1994 the passage of the Violent Crime Control and Law Enforcement Act made carjacking resulting in death a federal crime punishable by death. Also under the Act repair shops that sell or install marked used parts must check VINs against the FBI’s stolen car database through a national clearinghouse or risk fines. Additional provisions provided start-up funding linking all state motor vehicle departments to ensure access to titles; required states to check VINs of out-of-state cars before issuing a title to a new owner; required the Customs Office to perform spot checks of cars and containers leaving the country; required insurers to certify that the salvaged or junked vehicles they sell are not stolen; and established a grant program for state and local anti-car theft committees that was funded by car taxes or fees.

In response to Title II of the Anti-Car Theft Act combating title fraud, the National Motor Vehicle Title Information System (NMVTIS) was established. The system enables jurisdictions to verify the validity of titles prior to issuing new ones. It also curbs fraud associated with junk or salvage titles by recording this data in the system and preventing the sale of salvaged vehicles without disclosing this information. According to the American Association of Motor Vehicle Administrators, which manages the NMVTIS, as of December 2008 only 13 states had integrated the system’s online transactions into their titling systems, enabling them to make inquiries. Twelve states had provided files of all active titles and brands to the system, but do not make inquiries. Eleven more states are developing the capability to provide data and/or make inquiries.

The NMVTIS has the potential to track all vehicles by their vehicle identification numbers (VINs) and could be a valuable tool in terrorism-related investigations. The 1993 World Trade Center bombing was solved when authorities traced the truck that carried the explosives to its owners by its VIN. The NMVTIS can also aid law enforcement in curtailing VIN cloning, where thieves steal a VIN number from a legal vehicle and make a counterfeit VIN plate for a stolen vehicle.

Other Measures To Combat Auto Theft: The National Insurance Crime Bureau (NICB) combats auto theft by investigating cases referred to it by insurers and through its online databases. The databases allow member insurance companies to search files by driver identification data and also by license plate numbers, VINs and component vehicle part and type numbers. Information leading to the identification of the vehicle used in the World Trade Center bombing of 1993 was obtained through an NICB database that allows the user to enter a partial VIN. The complete VIN was reconstructed and matched to a van stolen from a truck rental company on the day of the bombing. The search service (VINCheck) is available to the public.

In the 1980s states and regions experiencing high auto thefts began to form Anti-Car Theft (ACT) groups funded by grants from coalitions of law enforcement groups, state funds, insurers and consumers to promote public awareness of vehicle theft and lobby for the passage of state legislation aimed at combating thefts. At least 13 states (Arizona, California, Colorado, Florida, Illinois, Maryland, Michigan, Minnesota, New York, Pennsylvania, Rhode Island, Texas and Virginia) have enacted Automobile Theft Prevention Authorities (ATPAs), mostly funded by a small surcharge on drivers licenses or registration fees, or on auto insurance policies sold in the state. Michigan pioneered the ATPA concept in 1986, allocating $1 from each auto insurance policy and channeling the funds toward combating auto theft. Michigan's program, called Help Eliminate Auto Theft (HEAT) includes a hotline for residents to report thefts and chop shop operations. From the program’s inception in 1985 through 2007, HEAT made 51,000 arrests and recovered 64,000 vehicles or parts worth about $585 million.

ATPAs and other states that have formed ACT groups use a wide range of programs to fight auto theft. Besides HEAT hotline programs, Combat Auto Theft (CAT) programs involve auto owners who voluntarily put stickers on their windshields that alert police that they can stop the car for a theft check after a certain hour. High-theft metropolitan areas have instituted task forces to combat auto theft. In Newark, New Jersey, a task force helped reduce the city's theft rate from the highest in the United States in 1991 to sixteenth in 1996.

Component Theft: More than 75,000 air bags are stolen every year, according to estimates by the Insurance Information Institute. NICB says that air bag theft costs insurers and vehicle owners more than $50 million a year. New air bags cost about $1,000 from a car dealer; on the black market the cost is between $50 and $200. To thwart thieves, steering wheel covers used with a steel bar steering wheel lock are available. New York combats air bag theft by requiring accident reports to note air bag deployment, and specifies procedures for auto repair shops to follow when replacing stolen or deployed air bags. Xenon headlights and global positioning systems (GPS) are also popular with thieves. By mid-2008, insurers and the NICB had observed a growing nationwide trend in the theft of catalytic converters. These components contain small amounts of platinum and palladium, precious metals whose value has risen with the use of catalytic converters and the growth in popularity of platinum jewelery.

Antitheft Devices: Consumers spend hundreds of millions of dollars on vehicle security devices. Electronic tracking devices such as LoJack use a hidden transmitter to allow police to track the vehicle. (LoJack, which operates in 26 states and the District of Columbia claims a better-than 90 percent recovery rate.) These tracking devices not only help police find individual stolen vehicles but lead them to chop shops, thwart the export of stolen motor vehicles and lead to the recovery of expensive construction vehicles as well as passenger cars. Some insurers offer their policyholders a LoJack tracking system at a discounted price along with premium discounts.

Insurer Discounts: According to the National Association of Insurance Commissioners, in nine states (Florida, Illinois, Kentucky, Louisiana, Massachusetts, Minnesota, New Mexico, Pennsylvania and Rhode Island) regulations require insurers to provide car owners with discounts on the base rates for comprehensive insurance for antitheft devices. In four other states insurers may offer these discounts or are encouraged to offer them. The amount of the discount varies but is typically 15 to 20 percent for passive devices, which are automatically activated when the vehicle is locked. Massachusetts residents are eligible for a minimum 25 percent discount if they have both an antitheft device and an auto recovery system, and some combinations of devices can result in a 36 percent discount. Insurance companies in states that do not mandate discounts, such as Georgia, New Jersey, New York and Washington, encourage car owners to install antitheft devices by voluntarily providing discounts.