Life circumstances can dictate your car insurance needs. You may need two separate car insurance policies for vehicles in your household — if you have a teen driver or live with an elderly parent, for example. However, there may also be times that you want to insure one vehicle with two different, which is known as duplicate coverage.
However, these options would likely cost you more than if you had a single policy. Plus, some laws and carrier regulations don’t permit duplicate coverage or two auto insurance policies on two different cars. Learn more about duplicate car insurance policies and their advantages and disadvantages.
- You can purchase duplicate coverage — two insurance policies on one car – but each insurance policy should be bought from different insurers.
- If you’ve been in an accident and filed a claim, the primary insurance policy pays first. Your secondary insurance company’s policy is known as the excess policy, which will only make payments after your primary policy’s limited are used.
- If you have two insurance policies or duplicate coverage, make sure not to file the same claim with both insurers. It’s illegal and will be considered fraud.
Can you have two auto insurance policies on the same vehicle?
In some instances, having two car insurance polices on the same vehicle is a good idea. If your car insurance company allows it, the following scenarios may be a good option for double policies:
- You own a classic, luxury or exotic car.
- You and another person who doesn’t live in your household take turns driving the same vehicle.
- The car’s second driver is excluded from your policy.
“Legally, you are allowed to have duplicate coverage for the same vehicle. But each policy would have to be purchased from different insurance companies,” says Kevin Quinn, vice president of claims and customer experience at Los Angeles-based Mercury Insurance.
For example, assume you are a co-owner of a car you share with another co-owner who doesn’t live with you. Or perhaps that second driver isn’t covered by your policy due to a poor driving record, history of claims or other reasons.
“In either scenario, you may want to ensure the vehicle is fully covered by having each driver get their own policy,” he says.
Two drivers can get separate car insurance policies on one vehicle through non-owner liability car insurance. This policy applies when one driver regularly uses the automobile but doesn’t own it and its liability coverage kicks in when the owner’s policy reaches its coverage limits or won’t pay out.
Duplicate auto insurance coverage disadvantages
While having duplicate car insurance coverage policies may make sense to your situation, consider the disadvantages because make no mistake: Getting duplicate coverage will cost you more money.
“Having two separate insurance policies on the same vehicle means paying for two insurance policies, regardless of the number of vehicles included on those policies,” Quinn says. “The amount you pay will depend on several factors, including state requirements, the driving record for all individuals listed on the policy and the make and model of the vehicle.”
If an accident occurs and a claim needs to be filed on the vehicle, the insurance company for the driver involved with the claim will preside as the primary policy. The primary policy will pay the claim first, and the other insurance company — the excess policy — will only make payments once the primary policy has been exhausted.
But that’s the best-case scenario. Experts don’t recommend purchasing two separate car insurance policies from different auto insurance companies. Duplicate coverage may violate either or both of the auto insurance policies.
“If duplicate coverage is allowed, be careful not to file the same claim with both insurance companies — that’s illegal and an act of insurance fraud,” Quinn says.
How can two insurance policies on one car cause unjust enrichment?
When you file claims with two different insurance companies for the same car to profit from a car accident, it is known as unjust enrichment.
It’s a good idea to understand unjust enrichment if you have two insurance policies on one car. If you experience vehicle collision or theft and you’re reimbursed by two different car insurance companies, you’re profiting from unjust enrichment.
Here’s how it works: The first company may pay off its policyholder’s claim, and the policyholder also gets reimbursed by the second company. The two companies that are paying for the same car may not have any knowledge of each other. This is one of the reasons insurance providers disapprove of people carrying multiple auto insurance policies on the same vehicle.
Can you have two car insurance policies on two different cars?
Many families have one car insurance policy that covers multiple vehicles. But there are times when you may want separate auto insurance policies for two vehicles driven by household members.
“Legally, you can have two car insurance policies for two different vehicles held in the same household. Each of the cars can also be in one person’s name,” Quinn says.
Some instances of having two different car insurance policies on two different cars within one household include a family member owning their own car that you don’t drive or having a teen driver. Another example is if you’re living with a roommate. You also may want different policies if you need luxury insurance for a classic or exotic car.
It’s a good idea to consider individual driving records. If you don’t want the increasingly negative driving record of a family member (who drives their own car) factored into your policy’s premiums, need to exclude them from your policy. This would require that person get their own insurance policy for their own vehicle.
Importantly, you might not be able to exclude your spouse from your policy and if you do an they drive your car, your insurer will not cover a claim.
“A child 16 to 23 years of age on your policy can make your insurance rates extremely high. In this case, your child can acquire their own insurance for their own car, making the policy for yourself and your car much cheaper. But your child needs to be financially stable to obtain and afford their own policy,” says Aurea Colston, a licensed insurance agent with Acceptance Insurance in Sacramento, California.
Further, minors cannot purchase car insurance policies unless they’re emancipated. And, car insurance for a teen costs significantly more if they have their own policy rather than being listed on a parent’s policy.
One advantage of purchasing separate car insurance policies for two cars is that you may find a better deal based on that vehicle’s model, features or usage.
Two car insurance policies will cost more money
As with duplicate coverage scenarios, separate car insurance policies for two different vehicles will probably cost more money than if you covered both cars under a single policy.
Instead, consider adding a multi-car discount to a policy that has more than one vehicle on it.
Remember that multi-car discounts are only available to those who own more than one vehicle at the same address. If you have multiple cars on one policy, you must have at least one car registered in the insured’s name. Also, this discount may apply only to coverages applicable to both vehicles.
Finally, many auto insurance companies rate the highest-risk driver with the highest-risk vehicle. So, if you create two auto insurance policies using the same insurance company, you won’t get a multi-car discount. You may also create a situation where the highest-risk driver is rated against both vehicles.
What is multi-policy auto insurance?
If you own more than one car, it is a good idea to get them all covered under the same auto insurance plan from a single carrier to reduce the impact to your pocketbook.
You can customize your auto insurance coverage levels so that each car has the right protection. Make sure you meet state minimum requirements while purchasing the insurance plan.
Having multi-car insurance is a great way to save money. It means that you only pay one company for your car insurance and don’t have to worry about paying anyone else or worrying about any complex paperwork.
— Les Masterson and Katrina Raenell contributed to this story.
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