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Which car insurance company pays when you have two policies in place?


A

Question: I want to know what happens if you get in an accident when you just switched to a new insurer, but had not yet canceled your old policy. I had a fender bender and don’t know which one to put the claim through. Can one pay for the deductible of the other?

Answer: State laws and car insurance companies’ policy terms vary, but typically your claim would be through your original policy, the one you were about to cancel.

The general rule of thumb is that the policy that was in place first is the one that pays. And, even though there are two policies at the same time, you can’t use one policy to pay for the deductible of the other.  

Having two policies on the same vehicle isn’t usually allowed, but when switching car insurance companies it’s not uncommon to have a couple of days of overlap as you wait for proof of coverage on your new policy. We typically advise for drivers to have a very short overlap period when changing carriers so that they don’t end up with an accidental lapse in coverage.

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Some states, in fact, mandate that you show proof that you have new coverages elsewhere before they allow you can cancel the policy that you currently have in place, so this means a short period of duplicate coverage.

Having an accident during the overlap period though makes things more complicated for claims and to change over your auto insurance coverage from one company to another.

Since you were unfortunate enough to have an accident during this overlap period, you should alert your original car insurance company and make your claims through this policy. 

You should also notify your new auto insurance company and inform them not only of the accident but that claims are being filed with your prior carrier.

Having an accident before there was an inspection of your car for physical damage coverages (which is required in some states and/or by some insurance companies) may affect your new policy.

Even if an inspection isn’t required, or was already done, having this accident may mean that to keep your policy with the new auto insurance company you'll need to show proof that you got your car repaired.

If you still plan to change policies after this accident, and the new insurer allows it, find out from your first insurer what the process is to make the claim for the damages and then cancel out the policy with them.

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