If you have ever been in a car accident, you know how expensive the repair and medical bills can be — especially if you’re the at-fault driver. Even with insurance, you might end up paying money out of pocket. You have a deductible to meet, and the expenses could exceed your coverage limits. You could also discover your insurance doesn’t cover everything you thought it did.
With all this in mind, you might wonder whether purchasing two car insurance policies is a good idea. After all, wouldn’t two policies mean a bigger payout and less risk? Not exactly. Although it is legal to have two car insurance policies, it’s not usually a good investment.
Is It Legal to Have Two Car Insurance Policies at the Same Time?
Technically, yes, you can have two car insurance policies at the same time. When most people ask this question, they want to know if it’s OK to have two policies on the same vehicle. However, others want to know if they can have policies for two different vehicles from two different insurers. Below are some reasons people might purchase a second auto insurance policy:
- You believe your current insurance policy has expired
- You share the vehicle with another person, such as a roommate or significant other
- Your teenager has started driving
- You need to insure an exotic or classic vehicle
- You have one vehicle for business and another for personal use
- You want supplemental coverage your current provider doesn’t offer
- You worry that adding your partner will raise your rates
- You want higher coverage limits to avoid out-of-pocket costs
Not all of these reasons are valid, though. Some represent a misunderstanding of how insurance works, while others can be addressed by changing the policy you already have.
Can You Get a Payout From Two Different Policies?
You cannot get a payout from two different companies for the same accident. Although it is legal to have two car insurance policies, you cannot file the same claim with two companies. Doing so constitutes car insurance fraud, and the companies involved can seek restitution for “unjust enrichment.” The penalties for insurance fraud can range from a simple fine to probation or even prison time, depending on the circumstances and whether you’re convicted of a misdemeanor or felony.
The potential legal consequences are not the only thing to consider. Because filing a claim typically results in a price hike, both companies would raise your rates, and you will likely lose any good-driver discounts you have. One or both companies might also terminate your insurance if they learn you have two policies. This can happen even if you haven’t filed a claim. For instance, in some states, the DMV might notify both companies that you have dual policies. If double coverage violates the terms of either insurer, that company might choose to cancel your policy.
If two insurance policies cover the same vehicle, you should only file a claim with one company to avoid fraud and unjust enrichment. However, keep in mind that even in the best-case scenario, where neither company minds you being double-insured or you have a valid reason for covering the same vehicle with two policies, your claim could take much longer to process as the companies work out who pays what. The companies might also take extra precautions to ensure you are not attempting to commit fraud and receive two payments.
Valid Reasons for Having Two Car Insurance Policies
You might need two separate car insurance policies if you have one vehicle you use only for business and one that is for personal use. In that case, your employer might pay for the insurance policy on your business vehicle. If you are self-employed, you can claim the costs associated with your business vehicle as tax deductions. In either case, a separate policy for the business-only vehicle will make accounting much simpler.
A separate insurance policy might also make sense if you need to insure an exotic, classic, or luxury vehicle. In this case, getting a separate policy from a company that specializes in insuring these vehicles might give you more comprehensive coverage and a better rate.
You might also want a separate policy if sharing a policy with your significant other or another household member would raise your rates. This could happen if they have poor credit or a history of traffic violations and accidents. Make sure you check the terms of your policy, though. A significant other who does not live with you might already be covered under your insurance’s permissive use clause. This clause means your insurance will automatically cover someone else who drives your vehicle occasionally, as long as they meet certain requirements, such as not residing in your home.
Why You Should Consider Bundling Your Insurance Instead
Purchasing insurance policies from two companies comes with significant drawbacks. It can make the claims process more complicated and, in some situations, could even lead to higher rates or policy cancellation. Having two policies for the same vehicle is especially tricky. In almost every case, you will pay two premiums for no additional benefit.
Bundling multiple insurance policies with the same company, on the other hand, typically results in a lower overall cost. Most companies offer multi-vehicle, multi-driver, and multi-policy discounts. Plus, shopping around for the best rates is easier when you’re bundling all your insurance policies together.
While the answer to “Can I have two car insurances at the same time?” is technically yes, most people will be better off bundling their coverage into a single policy. However, sometimes having separate policies through two insurance companies makes sense. If you aren’t sure, talk to a local insurance agent to discuss your options. An independent agent can help you compare options from multiple companies to find the best option for your needs.
At FIXD, our mission is to make car ownership as simple, easy, and affordable as possible. Our research team utilizes the latest automotive data and insights to create tools and resources that help drivers get peace of mind and save money over the life of their car.