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Does insurance cover a stolen car if the keys were in the car?

Alex Ritchie avatar
Alex Ritchie
- 4 min read
Does insurance cover a stolen car if the keys were in the car?

A car insurance policy that covers the theft of your car, such as third party fire and theft insurance, usually covers a stolen car. However, if the keys were in the car’s ignition, or left unattended in the vehicle full stop, some insurers may deny your claim.

What happens when your car is stolen with the keys inside

Whether insurance covers a stolen car when the keys were left in the car can vary depending on the specific terms and conditions of your insurance policy. Every insurance company and plan has different restrictions around these kinds of factors. 

The easiest way to know if your insurer will still cover your theft claim in the event your car is stolen with your keys inside is to read the terms and conditions of the insurance policy.

Unfortunately, for many insurance providers leaving the keys in the car may be seen as a case of negligence. Your terms and conditions likely stipulate that you must take reasonable care of the vehicle, including leaving the vehicle locked when unattended. 

Some insurers may deny a theft claim if you live in an area where there have been car robberies reported recently if they feel you have not taken appropriate cautions. Your insurance provider may even expect you to have installed anti-theft security measures in your car. 

Before filing your car insurance claim, you may need to confirm whether or not you left your keys in your car, and if they had been stolen or misplaced. The loss or theft of your car keys may be covered by a comprehensive car insurance policy, but usually as an optional item. If your car keys were stolen, mention this in your claim as this may help establish that your car was not stolen as a result of your “negligence”.

Which insurance policy covers you if your car is stolen?

In Australia, if you own a vehicle you’ll also own a compulsory third party insurance policy (CTP) for that vehicle. However, CTP insurance does not cover you in the event that your car is damaged or stolen - with or without the keys inside.

Only third-party fire and theft cover or a comprehensive policy will cover you in the event your vehicle is stolen. If your claim is approved, both insurance policies should cover you in terms of securing a replacement car, paying for towing charges, paying for repairs and potentially paying for temporary accommodation if you are left stranded without your vehicle.

Whereas a comprehensive car insurance policy may also pay you out for any stolen or damaged contents in the vehicle (typically up to a fixed amount), provide you with a new vehicle of the same make and model, or pay for replacement keys if your car keys are stolen or lost. 

Once again, the best way to know what you are covered for and the extent of that coverage is to go through the insurance policy terms and conditions with a fine-tooth comb. Be sure to also grab a copy of the Product Disclosure Statement (PDS) to get across exactly what you may be able to claim in the event the worst does occur. 

If your current insurance policy does not offer protection for vehicle theft, or you want to add coverage in the event the keys are left inside, it may be worthwhile comparing more competitive insurance options

Case Study: Insurer pays stolen vehicle claim despite keys left in car

In May 2023, a victim of car theft was reimbursed for their losses after their vehicle was stolen from a relative's driveway with the key fob inside. The insurance provider stated that the policy holder failed to take “reasonable care” of the car after leaving a bag in the vehicle which contained a remote keyless system.  

The insurer was found to have not provided them with the latest product disclosure statement (PDS) that outlined policy holders were not to leave ignition keys in the vehicle unattended. The policy holder had an older 2017 policy that did not have these restrictions. 

Because the policy holder took the time to look through the 2017 PDS they had, and because they successfully argued they did not access the newer PDS, they were able to receive a payout for their vehicle claim through the Australian Financial Complaints Authority (AFCA). 


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Product database updated 16 Jun, 2024

This article was reviewed by Personal Finance Editor Peter Terlato before it was published as part of RateCity's Fact Check process.