Can a car have two separate insurance policies?

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In a nutshell...
  • If you have a car officially registered in your name, you should only have one insurance policy for that car
  • You might find yourself in a situation where two different people have an auto insurance policy out on the same car because they are a married couple going through a divorce and figuring out how to divide up assets
  • Even if two insurance policies manage to slide by for the same vehicle, you could run into serious problems when trying to file a claim for damage sustained by that car because the insurance company could use the existence of two policies as a reason to deny your claim

It is not very common at all for there to be two auto insurance policies for the same car because it is prohibited by almost every major car insurance company in the U.S.

Instead, the typical arrangement is for there to be one insurance company for every car registered to an individual owner.

There is not really a good reason to have two insurance policies for the same car, and doing so could mean that you are prohibited from collecting a payout from your auto insurance company if you end up having to file a claim.

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The Risk of Unjust Enrichment from Having Multiple Policies

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The most important reason why auto insurance companies prohibit policyholders from taking out more than one policy for the same car is that they are trying to prevent insurance fraud and unjust enrichment.

If you have more than one policy for a given car, you could end up recovering from multiple sources if you file a claim, which means you could end up getting more money than what it would actually take to make you whole again after having your car damaged.

Unjust enrichment is totally contrary to the principles that the auto insurance company tries to enforce so that policyholders are restored to the position they were in before the accident.

If a policyholder actually benefits from filing a claim because he or she is in a better place than they were in before the accident, then this is going to drive up the price of insurance. An auto insurance policy is not intended to actually be profitable for the policyholder.

Car insurance companies have very specific restrictions written into their policies to make it as difficult as possible for any policyholder to commit fraud by taking out a policy and filing a claim under it.

In fact, many individual auto insurance policies will have a statement that the auto insurance provider has the right to terminate a policy on the spot if it finds out that the policyholder attempted to take out multiple policies using the same vehicle.

Another option might be that the auto insurance company that discovers the multiple policies will allow you to cancel the additional policies in order to maintain your current coverage with that provider.

If that is the case for you, then you should make sure to get notice of the cancellation in writing and respond to all requests from your current auto insurance provider as quickly as possible to avoid cancellation of all of your policies.

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What happens if your double insurance is discovered?

If your auto insurance company discovers that you have more than one policy for a car after your claim is filed, then you may be required to pay back any benefit that you receive.

The auto insurance company could seek restitution from you based on unjust enrichment of trying to receive multiple benefits arising out of the same claim.

If you were not aware of the double insurance policies or did not actually receive a payout from multiple policies, then the auto insurance company could not force you to pay restitution for that claim.

It is important to keep all of your documents and copies of all communications regarding a claim and the allegations by your auto insurance provider.

Switching Insurance Does Not Mean that You Have Double Policies

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You do not need to waste any time worrying about the potential for multiple auto insurance policies for the same car if you are in the middle of changing up your auto insurance provider.

This could seem confusing at first if you are trying to make sure that you do not have any lapse in coverage when switching auto insurance companies.

You may have decided to change your auto insurance provider based on information from quotes that you received online.

If you are looking forward to getting a lower price on your auto insurance coverage, you can be clear with your new auto insurance provider about when you need the policy date to start.

Although you want to make sure that you do not have any periods where you are actually driving without the required insurance, you do not need to have your new auto insurance policy go into effect without knowing when your current one will be canceled.

You do not want to be responsible for paying two premiums at once, which means that you need to be clear on when your new policy is starting up.

Avoid Enrichment at All Costs

It is not recommended or permissible for you to have multiple auto insurance policies out for the same car.

Insurance companies do not want to see this happen because it means that you have the potential to recover from multiple different sources for the damage to your car as a result of a single accident.

This type of recovery is called unjust enrichment, and it could be legitimate grounds for the auto insurance company to do the following:

You can always switch to a new auto insurance provider without being in danger of violating policies about only having one auto insurance policy per car that you own.

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