What's Duplicate Coverage And Why Should You Avoid It?

Understanding the specific elements of car insurance policies can sometimes feel overwhelming. But one area that you need to understand and that often sparks questions is the concept of duplicate coverage. This blog post will dive into what duplicate coverage means, why you might want to avoid it, and the situations where maintaining more than one policy can be beneficial.

What's Duplicate Coverage, and Why Should You Avoid It?

Duplicate coverage refers to having two or more insurance policies that cover the same risks for a single car. While it's not technically illegal to have multiple policies, it can lead to complications in the future.

Can You Have Two Cars With Two Different Insurance Companies?

It's perfectly legal to insure two cars with two different insurance companies. However, the problem arises when you try to insure one car with two policies from different companies. This practice can cause problems with claims and even lead to accusations of insurance fraud, as documented by the National Association of Insurance Commissioners (NAIC) (see page 27 of a report that they did).

Can You Have 2 Car Insurance Policies in Your Name?

Yes, you can. But keep in mind that in the case of an accident, both insurance companies will coordinate to settle the claim, as outlined in the insurance policies. They won't pay out twice, which means you'll end up paying premiums on two policies for no added benefit. The best way to think about it is by asking yourself, “What’s the point of having an extra monthly bill?”

What Are the Disadvantages of Double Coverage?

Double coverage often leads to higher premiums without providing any extra benefits. Also, it can cause confusion during the claims process, with each insurance company trying to push responsibility onto the other.

Is It Illegal to Have Two Car Insurance Policies on One Car?

While it isn't illegal, car insurance companies prefer that you don’t have two separate policies because of the potential for fraudulent claims. You could find yourself under investigation if you try to claim from both insurers after an accident.

Is it ever worth having two policies on one car?

There are, however, scenarios where having two insurance policies might actually make sense:

Scenario #1 Buying a Second Policy for a New Vehicle

When you buy a new car, you might consider getting a separate policy for it, especially if it has different coverage requirements than your existing vehicle.

Scenario #2 Establishing a Separate Policy for a Luxury Vehicle

If you own a luxury vehicle that requires specialized coverage, you might want a separate policy specifically tailored for this car.

Scenario #3 Purchasing Coverage for Another Driver

If you're purchasing coverage for another driver, such as a teenager or a high-risk driver, it could be beneficial to have a separate policy to protect your own premium rates.

Scenario #5 Keeping an Old Policy To Maintain Your Loyalty Discount

If you have a loyalty discount on your existing policy, you might choose to keep it while adding a new policy for additional vehicles.

Scenario #7 Buying a New Policy To Protect Yourself After a Separation

In the case of a separation or divorce, you may need to get separate policies to make sure everyone is covered.

Other Things To Consider When It Comes To Duplicate Coverage

Beyond these scenarios, there are other important things to consider.

Invest in One Comprehensive Policy

Usually, it's more beneficial to invest in one comprehensive policy that can cover all your vehicles. You can usually add multiple vehicles to a single policy at a discounted rate. Just make sure you do your research and weigh all of your options.

Where else might I end up Double Insuring?

You might end up with duplicate coverage without realizing it, especially if your policy auto-renews and you've sought coverage elsewhere. Always keep track of your policy renewal dates to avoid this.

If I double up on my car insurance, can I get a refund?

If you realize you have duplicate coverage, contact your insurer immediately. They can usually prorate a refund for the duplicate coverage. However, this may vary depending on the terms and conditions of your policy.

While there are rare scenarios where maintaining multiple car insurance policies can be beneficial, it's generally better to avoid duplicate coverage. The complexities and potential disadvantages usually outweigh any potential benefits.

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About the Author: This article was crafted by the LOOP Marketing Team. Comprising of seasoned professionals with expertise in the insurance industry, our team is dedicated to providing readers with accurate, up-to-date, and valuable information. At LOOP, we're passionate about helping families navigate the world of car insurance, ensuring they get the best coverage at the most affordable rates. Learn more about our mission and values here.

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