Zaneta Wood, Ed.S. has over 15 years of experience in research and technical writing bringing a keen understanding of data analysis and information synthesis to reach a wide variety of audiences. She studied adult education and instructional technology at Appalachian State University as well as technical and professional communication at East Carolina University. Zaneta has prepared technical p...

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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, largely in the insurance...

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Reviewed by Leslie Kasperowicz
Farmers Insurance CSR 4 Years

UPDATED: Mar 13, 2019

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Important facts to know...

  • It is legal to have two car insurance policies on one vehicle
  • An ownership interest is necessary to have car insurance on a vehicle
  • Having multiple insurance policies can slow claims and create legal problems
  • There are difficulties when there are two car insurance policies on one vehicle

An ownership interest is necessary to have car insurance on a vehicle. Insurance companies cover for loss if a vehicle is involved in an accident or has damage. Car insurance policies restore the insured to the position they were in before the loss occurred.

Be sure you have the protection you need for a rate you can afford. Compare quotes today by entering your zip code right now!

Ownership Interest

If you have no ownership interest in a car, you cannot take out an insurance policy on that car.Here are some things to consider:

  • If you are the bank that financed the car, you have an interest in the vehicle.
  • If your name appears as an owner on the vehicle title, you have an interest in the vehicle.
  • If you want to insure a car belonging to your neighbor that you do not own, you do not have an insurable interest.

These rules are designed to prevent unjust enrichment.

Insuring a car that you do not own is gambling that you can make money if the vehicle has a loss.

Insurance companies prevent this by requiring you have an ownership interest in the car, which prevents a person from receiving unjust enrichment that is not due.

Insurance companies limit the dollar loss to the actual damages incurred.

The company does not want you to profit from having an accident. If you were to collect a full payout from each of two different insurance policies, you would receive twice as much money as the total loss suffered, meaning you would receive unjust enrichment.

There can be instances where there is more than one owner of a car, and they could include the following:

When a person borrows your car, they do not have an ownership interest in the vehicle. They will not be able to buy an insurance policy on your automobile.

When you do comparison car insurance shopping, you can discuss with the agent the best insurance options to cover your vehicle.

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Who Pays For Loss When Two Insurance Companies Cover A Vehicle

When more than one insurance company insures a car, there can be challenges during the claim process. Here are some of the problems that can arise:

  • Both insurance companies may try to keep from paying the claim, asserting that the other insurance company is responsible
  • Each insurer will determine the person at fault in an accident, and each one could find different levels of fault
  • There may be different deductible limits on each policy

Car insurance companies want to limit their claim payments to the dollar amount required to cover the loss. When there are two insurance companies involved, they may want the other insurance company to pay more than 50 percent of the total loss.

This problem can create time delays in settling the claim, and may involve legal delays to determine how much each company must pay.

You Can Have Stacked Limits On Some Coverage

Most states permit an insured to combine the total limits for Medical Payments or Personal Injury Protection (PIP) on a single car insurance policy, which allows you to double the maximum dollar limit the insurance company will pay in an accident.

You cannot collect twice for the same expense, but you may have a total limit on medical payments for $40,000 instead of $20,000 when you stack PIP coverage, allowing you to have more medical bills that can be paid by the insurance company.

A car could have coverage from multiple insurance companies even though the double coverage was not intentional. Some of those times can include:

  • New policy started while old policy is still in force
  • Separate coverage on two different cars you own
  • Collectible cars or motorcycles
  • Commercial vehicle for your business
  • Multiple owners of car such as:
    • A separated couple
    • Friends buying a car with both names on the title
  • Loan company might secure temporary coverage if they receive notice your coverage is no longer in force
  • Placing a high-risk driver on a different insurance policy
  • Residences in two states which may involve two varying levels of coverage
  • Buying damage waiver coverage on a rental car
  • Your credit card provider may have damage coverage when paying with your credit card

When any of these events occur, settling a claim can be difficult. The two companies may fight over how much they will pay for the loss.

When you have a loss on car insurance, a national database like C.L.U.E. (comprehensive loss underwriting exchange)receives information on the claim.

If you have more than one car insurance company insuring your vehicle, the database reflects two claims, showing one for each insurance company. The multiple claims could raise your premiums, or affect renewal on your car insurance.

Paying Two Car Insurance Companies May Cost More Money

In many cases, you will pay a larger premium for insurance when buying a policy from two different car insurance companies.

You pay for twice the coverage, even when you can only collect one time. Exception that may reduce your premium may include:

  • Collectible cars
  • Motorcycles
  • Commercial vehicle owned by your business
  • Placing a high-risk driver on a different insurance policy
  • Rental cars

In these cases, you may be able to save money on your automobile insurance using two separate car insurance companies. You can compare insurance rates and ask your agent about the difference in premiums.

When you insure multiple vehicles with one company, you can receive multiple car discounts which can result in substantial dollar savings.

It is legal in most states to have one vehicle insured by two different insurance companies. Having two insurance companies makes a claim challenging to settle, taking more time.

You must have an ownership interest in the car to buy insurance. At times a vehicle can be covered by more than one company. Multiple insurers can make claims difficult to settle.

Don’t overpay for your car insurance. Compare quotes today and see how much you could save!