Auto insurance is important because it can protect you from financial losses in the event of an accident, theft, vandalism, or a natural disaster. It's also a requirement for drivers in most states. Typically, drivers purchase one auto insurance policy that includes different types of coverage or covers multiple drivers in their households. However, you may be in a special situation and wonder if you should have multiple policies on the same vehicle. So, can you have two auto insurance policies on one car?
Is It Legal to Have Two Auto Insurance Policies?
It's perfectly legal to have two auto insurance policies on one vehicle. Nonetheless, your insurance company may not be willing to insure the same vehicle twice. You may have to buy a second policy from another insurer and pay both bills.
Many drivers accidentally have two car insurance policies because they mistakenly thought that the policy had expired and bought another policy. In some cases, people have a second policy to cover their classic or exotic vehicle.
Having two auto insurance policies is legal, but filing the same claim with two different insurers isn't. If you receive compensation from two insurance providers for the same claim, it's regarded as insurance fraud, says Motor1.com.
Should You Buy Two Car Insurance Policies for the Same Vehicle?
While you're technically allowed to purchase two auto insurance policies for the same vehicle, it isn't recommended. Double-insuring a car may violate the policies of one or both of your insurers. Additionally, if one of your insurers knows that you have another policy on the same car, they may ask the other insurer to pay your claims in the future. This can result in delayed or unpaid claims.
If you live with a significant other, you may wonder whether you should add your partner to your auto insurance policy or have two policies. If they're a member of your household, your auto insurance provider likely will want them added to your current policy. Since adding another driver to your policy can potentially increase the premium, it's recommended that you share one policy with your partner. Doing so also makes you eligible for a multi-vehicle discount.
If your significant other doesn't live with you, they may already have protection under the “permissive use” clause in your car insurance policy. This clause permits drivers who don't live with you to use your car under your consent. Different insurers may have different “permissive use” clauses, but your partner will typically be covered if they live elsewhere.
You should note that your significant other may not be covered under your policy's “permissive use” clause if they don't have car insurance from another provider. Also, if they drive your car more than 10 to 15 times each year, you will need to add them to your policy.
It may be better for your partner to have a separate auto insurance policy if they don't live with you. If your partner has a bad credit score or poor driving record, adding them to your policy will likely cause your car insurance premiums to go up. Another good reason to have two auto insurance policies is that you or your partner owns an expensive vehicle. In this case, adding one person to the other's policy can raise your rates.
What Are the Disadvantages of Double Coverage?
When you own a car with someone, and you each buy auto insurance for that car, double coverage occurs. If you're both covered under a single policy, there's nothing to worry about. However, if you purchase a policy from GEICO and your co-owner has a policy with Allstate for the same car, confusion can arise.
According to PocketSense, the problem with having double coverage is that it can be difficult to determine whose insurance company should pay for damages in the event of an accident. If you have double coverage and you rent a vehicle, it's clear that your car insurance provider will pay for everything if you get involved in an accident. However, if you co-own a vehicle and have two policies, things aren't so clear-cut.
Under normal circ*mstances, you'll file a claim with your insurance company if you meet with an accident. However, if another friend uses the vehicle and gets into an accident, you may not know whose insurer to contact. In another example, say somebody hit your parked vehicle and fled from the scene. What should you do if you and your co-owner are both in the vehicle when the accident happens?
Is It Better to Have Only One Auto Insurance Policy?
When you have two auto insurance policies, you run the risk of violating the policies of your car insurance company. You may also violate a certain clause in your policy. Also, your insurance provider may think that you intend to enrich yourself. If both insurers take this stance, they may refuse to pay your claim in the event of an accident, which can put you and your co-owner in a jam.
To prevent confusion and nonpayment of claims it's recommended that you and your co-owner insure the vehicle with a single policy. You can have both your names listed on the policy and share the cost.
How Does an Insurer Identify Auto Insurance Fraud?
Having double coverage doesn't necessarily mean you're trying to commit car insurance fraud. According to Car Insurance Comparison, an insurance company must be able to prove the following to obtain restitution for unjust enrichment:
- The policyholder has benefited at the expense of the insurance provider.
- The policyholder knows that they've benefited from the claim payment.
- The policyholder has retained the benefit even though they're aware of the profits.
Although having two auto insurance policies on one vehicle isn't illegal, it can cause confusion that may lead to an unpaid claim. Therefore, it's recommended that you try to avoid double insurance for a vehicle unless it's truly necessary.
Check this out if you need more information, tips, or resources on car insurance.
Sources:
Can You Have Two Car Insurance Policies?
Can a Car Have Two Separate Insurance Policies by Two Different People?
Should I Have Two Car Insurance Policies?
Exotic Car Insurance
Car Insurance Premium
Benefits of Car Insurance
Hearst Autos Research
Hearst Autos Research, produced independently of the Car and Driver Editorial staff, provides articles about cars and the automotive industry to help readers make informed purchasing choices.
