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

UPDATED: Oct 14, 2021

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Important facts to know...

  • It is not illegal to have two insurance policies on a vehicle, but it is frowned upon
  • Confusion can arise if you happen to get into an accident when you have two insurance policies
  • It may be a better option to have one full coverage policy that gives you the protection you need

When it comes to car insurance, you may think that it’s impossible to have too much. You want to make sure that you have adequate protection in place just in case an accident occurs.

Because of this, you may decide that you want to take out two automobile insurance policies on a single car.

While this is an admirable train of thought, and one that points to a responsible motorist, it may not be the smartest decision.

Use this information to learn more about why insurance companies aren’t too keen on providing protection for individuals with multiple policies on a single car. Then, enter your zip code above to begin comparing car insurance quotes.

Insurance Is Designed to Indemnify, Not Over Compensate

The first thing you must understand when attempting to make sense of the two policy issue is the nature of insurance. While you may think that insurance is in place to let you gain financially if you’re in an accident, this is simply not the case.

Insurance is all about indemnification, which is the act of making you whole again after an incident.

For example, you may have a vehicle that is worth $10,000 dollars. While you’re in the store grabbing a bite to eat, a motorist strikes your parked vehicle in a hit-and-run accident that is determined to be the other party’s fault.

Since you have full coverage that includes uninsured motorist protection, your insurance company agrees to cover the damages.

Because the vehicle was severely damaged, your insurance company may declare it to be a total loss. Remember, the car is worth $10,000 according to a reputable source such as the Kelley Blue Book.

If you had actual cash value coverage on the car, the insurer is going to give you what the car is now worth: $10,000 dollars.

Nevermind if you paid $15,000 dollars for it at the time of purchase. Indemnification states that the time you drove the car compensates for the $5,000 dollars that you’ve already paid for it, and therefore you’re only out $10,000 dollars.

This same principle can be applied to getting two insurance policies.

The practice is frowned upon because it means that you will be earning something known as unjust enrichment from an insurance transaction if both insurers pay out on the claim, rather than being indemnified, which is the purpose of insurance.

It’s not illegal because it is possible for two different people to have two separate policies on a single car, especially when it comes to things like separation or divorce.

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If an accident happens, who pays?

Another reason why you should avoid getting two insurance policies is because there could be some confusion concerning who should pay out on a claim if an accident happens.

While you may think that you can covertly file the claim with the insurance companies separately, this plan could go array.

Depending on which state you live in, there may be a system in place wherein insurance companies immediately report it to the state when you either obtain coverage, let your policy lapse or cancel insurance protection altogether.

This is important to know, because if you file a claim, it’s highly possible for both insurance companies to find out about each other.

Insurance companies have become very sophisticated as it pertains to trying to keep down instances of fraud since this could drive up rates for other drivers.

If it’s determined that you’re trying to lay claim to two different policies, you could find yourself dropped from both insurance companies and having a hard time getting a policy with someone else.

Stick With A Single, Full Coverage Policy

The best thing for you to do is stick with a single, full coverage policy. If you’re concerned that one won’t be sufficient, maximize your limits so that they are as high as possible.

Also, if your insurer offers an umbrella policy, you may want to obtain that as well. Umbrella policies often have limits that can climb into the millions. This should be adequate enough to ensure that you have the peace of mind that you need.

If you’re willing to take the time to carefully do your research, there’s no reason why you shouldn’t be able to find a policy that more than takes care of your insurance needs. Instead of getting two policies, get a single policy that features all of the great coverage that you deserve.

Enter your zip code below to see how much you could save on car insurance.