Yes, it is possible to have two auto insurance policies on the same car, a practice sometimes referred to as “double coverage“.
While uncommon, there are a few circumstances where a vehicle owner may opt to purchase multiple insurance policies for a single vehicle. However, there are important factors to consider before obtaining overlapping coverage.
Is it Possible to Have Two Auto Insurance Policies on One Car?
Understanding the Concept of Double Coverage
Having two auto insurance policies on a single vehicle essentially provides double coverage – if you file a claim, you can potentially collect payouts from both policies. For example, if you have two policies that each provide $50,000 in liability coverage, you could receive up to $100,000 in payouts for a covered incident. While this may seem beneficial, insurance companies often have regulations in place to prevent policyholders from profiting excessively from double coverage.
Exploring Reasons for Having Multiple Policies
There are a few scenarios where a vehicle owner may intentionally purchase multiple policies:
- Young drivers on their parents’ policy – Teenagers may be listed as insured drivers under their parents’ policy, while also having their own separate policy.
- Businesses insuring company vehicles – Businesses may insure company cars under a commercial policy and also have the employee insure the car personally.
- Specialty antique or classic car insurance – Owners may have a standard auto policy plus extra coverage through a specialty insurer.
- To get additional coverage types – Policies offer different types/levels of coverage, so multiple policies can maximize coverage.
Discussing Potential Consequences or Issues
While legal, double coverage can lead to complications. Insurance companies may prohibit collecting payouts from multiple policies, only allowing policyholders to claim under one. Having overlapping coverage is often redundant and likely costlier than necessary. It can also lead to coverage disputes between insurers regarding who is responsible for covering a claim.
Factors to Consider When Having Multiple Policies
Reviewing Insurance Company Regulations & Restrictions
Insurers commonly have clauses prohibiting double recovery from multiple policies. Policies may have “other insurance” stipulations dictating which insurer pays first in the event of overlapping coverage. Be sure to understand each insurer’s rules regarding multiple policies.
Understanding the Cost Implications
Maintaining two auto insurance policies on one vehicle is almost always more expensive than having one comprehensive policy. Premium costs are multiplied, while the actual coverage may not increase proportionately. Analyze if the extra cost provides worthy benefits or if consolidating makes more financial sense.
Identifying Coverage Duplication or Gaps
Overlap in coverage types or policy limits between the two insurers can mean wasted premium dollars. But gaps can also exist, so reviewing both policies is vital to ensure complete coverage. Removing redundancies and filling gaps may allow consolidation into one cost-effective policy.
Benefits of Having Two Auto Insurance Policies
Added Protection
For some high-risk situations, like teenagers driving parents’ cars or businesses insuring vehicles, two policies can provide extra protection. The ability to claim under multiple policies if an accident exceeds one policy’s limits can be valuable.
Coverage for Specific Circumstances
Having specialty policies tailored to particular situations like antique cars or rental vehicles in addition to a standard auto policy can be beneficial. Specialty insurers provide customized coverage that generic insurers may not.
Alternatives to Multiple Policies
Adding Additional Drivers to the Existing Policy
Rather than separating policies, parents can add teen drivers to their policy to extend coverage. This avoids overlap and disputes between insurers while still covering the child.
Exploring Umbrella Policies
Umbrella insurance provides additional liability coverage beyond existing policies. This supplemental coverage can provide substantial extra protection more cost-effectively than a duplicate auto policy.
Discussing Named Driver Policies
For shared vehicles, insurers may offer named driver policies covering only certain drivers. This gives coverage flexibility without needing multiple policies.
Conclusion
While permitted in some scenarios, having two insurance policies on one vehicle is often unnecessary and not cost-effective. Weighing the benefits against the complications is important before purchasing overlapping coverage. Alternatives like adding drivers or supplemental umbrella policies can provide similar benefits without issues of double coverage. Speaking with insurance providers to understand policy regulations is key to making an informed decision.
