Seeking theft reassurance through insurance

September 18, 2023
In the News

As originally featured in Automotive News (September 18, 2023).

Author: David Kennedy

For one F&I provider, the sale of theft-related products in Ontario jumped 125 per cent in the first half of 2022

SCRAMBLING FOR ANSWERS TO THE steep increase in vehicle thefts across Canada over the past five years, consumers are turning to dealership finance and insurance departments for solutions. Uptake is booming for F&I products that offer buyers a measure of protection for either the vehicle itself or the victim’s financial situation, said Jeff Schulz, executive vice-president of marketing at LGM Financial Services, a Vancouver F&I provider.

“Having products like this that help give the consumer some protection give the dealer an answer,” he said. Through the first half of the year, sales of LGM’s theft-related products at dealerships were up roughly 50 per cent across Canada, Schulz said. In particularly hard hit Ontario, the sales increase topped 125 per cent, an LGM public relations contact said.

In Canada’s most populous province, vehicle thefts rose to 28,121 in 2022, up 48.3 per cent from the year before, according to a June report from the Équité Association, an insurance industry-backed not-for-profit. Ontario’s growth in car thefts was topped only by Quebec, where the number of stolen vehicles hit 14,480 in 2022, up 50 per cent from 2021.

Against this backdrop, the Canadian Automobile Dealers Association (CADA) has also noted the surge in activity in the theft-related F&I segment. “This wave of stolen-vehicle threats … is driving consumer anxiety about the car they’re driving, it’s driving affordability problems with insurance prices going up,” said Huw Williams, CADA’s public affairs director. “And also with the vehicle shortage, it’s tough to even replace the vehicles.” The federal government’s unwillingness to tackle the theft “epidemic” over the past five years has forced auto stakeholders to seek solutions on their own, Williams said. “At the end of the day, it’s the Canadian public that pays, and it’s the federal government that’s not doing their job,” he said.


As consumers wait for answers, the costs are adding up. According to Équité’s June report, insurers paid out more than $1 billion for vehicle thefts in 2022. These losses are passed on to drivers through higher insurance premiums at the same time they’re turning to supplementary anti-theft products to top off traditional coverage.

Vehicle replacement insurance is one increasingly important offering, Schulz said. Traditional insurance payouts are based on Canadian Black Book values, putting theft victims at the mercy of vehicle depreciation and inflation.

“You don’t want to be out the differential from what the coverage from insurance will be and the new-car cost,” Schulz said. Dealers are pitching the product to customers far more often as theft becomes more common, he said. On a $40,000 vehicle, the coverage costs about $1,800 over the financing term, he said.

“If your vehicle is stolen, you get an allowance toward purchasing a new vehicle,” Schulz said. “And depending on how much the vehicle’s valued, the amount goes up.”


To ward off prospective thieves and increase the chances that stolen vehicles are recovered, LGM also offers window-mounted anti-theft decals accompanied by unique, nonvisible identification codes. The decals warn thieves the vehicle and its components can be traced, while the hardto-detect, UV-sensitive codes allow vehicles or their parts to be identified, if found. Costs to new-car buyers total about $500.

And while it’s difficult to measure if or how much the decals act as a deterrent, Schulz said, opting for the protection gives the buyer a discount of up to $5,000 on a replacement if their decaled vehicle is stolen and not recovered. Increasingly, Schulz said, dealers are putting the decals on all the vehicles they sell, to protect both consumers and themselves.

Auto experts and law enforcement point to consumers as the main targets of vehicle thieves, but dealers are not immune.

Data from the Toronto Police Service, one of the forces that breaks down stolen vehicles by source, shows that seven per cent of the city’s 9,606 vehicles reported stolen in 2022 were commercial thefts.

The rising rate of lot thefts is prompting dealers to focus more on security, Williams said. “They’re definitely trying to mitigate, harden up against organized crime.” — ANC