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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UPDATED: Sep 13, 2021

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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

Drivers usually only have a single policy on cars that they own, which means that they have ownership interest. Having ownership interest is necessary in order to have car insurance on a vehicle. Auto insurance companies cover for loss if a vehicle is involved in an accident or has damage. Plus, most auto insurance policies have options, allowing for coverage on both the vehicle and the insurer as well. Car insurance policies restore the insured to the position they were in before the loss occurred, and means that there are very little out of pocket costs for you.

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

What exactly is 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.

Drivers who insure a car that they do not own is gambling that they can make money if the vehicle has a loss. So take care, because there are no benefits to be had in doing something like this.

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.

An insurer 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, so an insurer will not pay out a claim that they attempt to make. Plus, they will not be able to buy a separate policy on your automobile. Rather, to ensure that your car is covered while they’re driving it, you’ll probably have to make sure you have coverage options under your existing policy that will protect them and your car. Just make sure that whoever you let drive your car will take care of it, too.

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 there are separate car insurance policies on a vehicle, 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 fifty 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. Having two policies isn’t illegal, but trying to get the same amount of money and filing the same claim with each of them is, which can be classified as insurance fraud.

Can you 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 even if you have multiple auto insurance policies, 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, which means that all auto insurers can see that data.

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.

Would paying two car insurance companies cost you more money?

The short answer is yes, double coverage means double the cost. 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, because you essentially have two primary plans. Exceptions 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. Having a separate plan for the cars that you collect or motorcycles that you only drive a certain amount each year aren’t uncommon. 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. It also hikes the cost of insurance premiums and could be looked at as a way for drivers to try and make money of their insurer.

Remember, you must have an ownership interest in the car to buy insurance. At times a vehicle can be covered by more than one company; drivers who own collectibles might see benefits of having different types of coverages since they’d have cars they drive and others that are simply for display. Multiple insurers can make claims difficult to settle, and payment could be delayed for legal reasons.

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