A former insurance producer, Laura understands that education is key when it comes to buying insurance. She has happily dedicated many hours to helping her clients understand how the insurance marketplace works so they can find the best car, home, and life insurance products for their needs.

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products, including home, life, auto, and commercial, and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, mainly in the insuranc...

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Reviewed by Leslie Kasperowicz
Farmers Insurance CSR 4 Years Leslie Kasperowicz

UPDATED: Apr 29, 2022

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Important facts to know...

  • Backdating the effective date of an insurance policy refers to activating the insurance policy on a prior date
  • Virtually no auto insurance company will backdate an insurance policy because the carrier will assume major risks
  • If a carrier backdated your coverage, the carrier would be responsible for accidents you had before you applied
  • In some states, when an insurance agent is guilty of backdating your coverage they can be found guilty of fraud
  • It’s possible that your insurer will backdate your cancellation when you have the right type of proof for backdating

When you finally become a vehicle owner you need to be sure that you’re ready to buy auto insurance. Securing coverage is one of the things that you can’t put off or you’ll be at risk of losing your vehicle and other assets in just the blink of an eye. A responsible driver is going to have coverage ready to go by the time they purchase a vehicle. Driving while uninsured for any period of time is dangerous and financially irresponsible.

Not only is it risky to drive without insurance immediately after buying a car, it’s also against the law.

If you’ve made the mistake of failing to buy insurance when you bought your car, you could be in hot water with your lender or your state’s motor vehicle agency.

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When you’re asked to present proof that you had coverage from the moment that you became a vehicle owner it’s difficult to do unless you really bought coverage. It’s tempting to start shopping for a backdated policy. However, just like with most time sensitive services offered, backdating is considered unlawful in some instances.

How is a traditional auto insurance policy sold?

hen you start to shop the market for a policy on any vehicle that you own or finance you need to compare rates. Services that cover your vehicles don’t come cheaply, so you want to make sure you’re not overpaying.

Consumers must provide their personal information and answer all of the questions presented for an accurate quote. The quote that’s given is an estimate of what your premium will be if you secure a policy at the current time or on a future date.

If you’re in need of coverage right away, the soonest that you can bind your insurance when you apply is the date that you’ve submitted your application and your first payment.

If you may your payment on January 1st at 3:30 in the afternoon, all claims after 3:30pm will be covered as long as you keep your policy active and comply with the terms.

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What happens when you select a future effective date?

If you don’t need insurance immediately and you’re going to choose a future date, your coverage will take effect on the effective date that you put on your application.

To be specific, the coverage will start at 12:01 am on the date that’s selected, whether it be a couple days after you submit your application or a couple weeks after. Your payment will be due on that date of the month rather than when you applied for coverage.

What does it mean to backdate insurance?

One of the terms that are used in the industry is backdating. When an insurance policy is backdated, it means that the insurer will put your coverage into effect before your policy was actually purchased. This can get a little confusing, because you end up having to pay for a half-month, or for as much time as you backdated your policy. But it does ensure that you have coverage on your car.

Any claims that occurred from the backdated inception through the remainder of the term would be covered by the auto insurance carrier.

What is an example of backdating insurance?

If you’re still confused, hopefully an example will help. Jim purchased his new Ford F150 on April 18th. He failed to purchase insurance before he left the finance office and then completely forgot to bind a policy when he returned home.

Since Jim didn’t have a policy in place, he doesn’t have an automatic coverage provision to protect him.

After receiving a notice from his finance company on June 1st asking for proof of insurance, Jim rushes to buy a policy. If the policy takes effect on the date that you apply for insurance, Jim is considered to have had a lapse in coverage. April 18th to June 1st is a long period of time to not have auto insurance coverage. However, regardless of the length of time, an insurance lapse is never a good thing.

If Jim can find an insurer to activate coverage back to the purchase date, it’s an example of backdating the policy.

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Do any auto insurance companies offer backdated policies?

It’s virtually impossible to find an insurance company that’s willing to backdate your coverage and say that you were insured before you applied for your policy. Most experts tell you to beware of any company that’s willing to take on that risk because it’s probably not a reputable one.

If you do find a provider in the high-risk market that’s willing to take that risk, be prepared to pay a pretty penny for your policy.

In states where backdating is even allowed, the policy will include some risk-based charges that will make the premiums higher than they would be for a standard policy. It might even cost less to take the state-assessed fine.

Is backdating insurance considered fraud?

Not only is backdating coverage frowned upon, in many states it’s illegal.

When state officials prohibit backdating insurance it’s classified as insurance fraud. Some states will only pursue legal action for insurance fraud after backdating coverage when there was a claim and the agent purposefully backdated the policy prior to the loss. If the backdated period of time was only a few days, and there was no claim filed in that time, it may not be taken too seriously. But if it was done in the intent to cover an accident, that could have dire consequences.

Usually, an agent or sales person will be the one charged with backdating coverage to defraud the company. In most state penal codes, insurance fraud is a felony. Agents charged and found guilty will lose their license. They may also be ordered to pay a fine or to serve time in prison.

What happens is you have a lapse of insurance?

As you can see, it’s not realistic to think that you’ll be able to backdate coverage when you don’t have existing insurance in place. If you already had insurance, you’ll have 14 to 30 days of automatic coverage on your new car.

When you’re not lucky enough to have automatic coverage, here are some penalties:

  • Charged for forced-placed insurance on your loan
  • Vehicle impoundment
  • Repossession
  • Citations
  • Registration suspension

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Will auto insurance companies backdate the cancellation of a policy?

Insurance companies won’t backdate the cancellation of your policy all the time but they may if you have the right proof. Most of the time, you need to show that you have new insurance or that you sold your car to backdate a cancellation. If you don’t have sufficient proof, you’ll have to select the current date.

You need to get insurance right away if you haven’t already. The sooner you get protection the better off you are. Get instant quotes via the world wide web and comparison shop now. After you review quotes, you’ll be able to apply for coverage immediately.

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  1. http://www.investopedia.com/terms/b/backdating.asp
  2. http://www.nasdaq.com/article/your-car-insurer-will-not-backdate-your-policy-cm213238
  3. http://www.doi.idaho.gov/investigations/Consumers/FC_Terms.aspx
  4. http://www.aiadc.org/File%20Library/Resources/Industry%20Resources/Insurance%20101/Ins_101.pdf
  5. http://www.state.gov/ofm/dmv/insurance/index.htm
  6. https://govt.westlaw.com/nycrr/Document/I504824b1cd1711dda432a117e6e0f345?viewType=FullText&originationContext=documenttoc&transitionType=CategoryPageItem&contextData=(sc.Default)
  7. https://www.thebalance.com/proof-of-insurance-101-527410
  8. http://www.nj.gov/dobi/division_insurance/bfd/enforcement.htm
  9. http://www.insurance.ca.gov/0300-fraud/0100-fraud-division-overview/05-ins-fraud/
  10. https://insurance.az.gov/consumers/insurance-fraud
  11. http://thismatter.com/money/insurance/types/auto-insurance.htm
  12. https://www2.illinois.gov/sites/insurance/Pages/default.aspx