Can insurance companies backdate premiums?

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Key takeaways...
  • Most car insurance companies will backdate coverage and premiums when requested
  • A No Known Loss letter may be required to backdate coverage
  • The longest you can backdate coverage for is typically up to 60 days, at most

The whole concept of taking a car insurance policy and backdating it is not new. Potential insureds in the market have been asking car insurance carriers to backdate coverage for years now.

The thing to remember with this, though, is that every single car insurance carrier is different.

While one may give you an answer, you may get ten more answers from other carriers that are the complete opposite. As a consumer, it is always fair to ask the question should you truly need the backdated coverage to happen.

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The Concept of Coverage Backdating


So what exactly is the concept of having a car insurance policy premium be backdated?

Think about car insurance, in this aspect, as if you had a time machine. The whole idea of backdating car insurance is to buy a policy for a past period of time.

Say it is the first day of December and you are still driving the car that you just purchased a week or so ago, but without a car insurance policy.

Legally, you need to have a car insurance policy that is going to be covering that automobile.

What you may do in this instance is to reach out to a car insurance carrier to see if you can get a policy that went into effect a week ago, when you actually picked up the new car, rather than today.

Backdating is different than how insurance typically works. A car insurance policy is usually a forward-looking product.

You are buying a policy contract that is going to go into effect, at the earliest usually, the minute that you pick up the phone to call the insurance carrier. The idea is not typically to have it go into effect in the past.

This is not to say it is not possible, but it is just far from the norm.

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Inquire About Backdating

In the event that you truly do need to have a car insurance policy backdated, always ask. You may get a firm no from one insurer, while you may find another that is more open to the whole idea of it.

In the insurance industry, as long as it is within the regulatory guidelines of the state’s department of insurance where you are looking for coverage, chances are you will be able to find an insurer that will abide by your request.

This is all going to come at a price, of course. You may find that you are paying a much higher premium to have it backdated, but that is not to say that it is not possible.

The No Known Loss Letter


One of the big caveats that most car insurance carriers will go with when they agree to backdate coverage is what is known as a No Known Loss letter. This is a formal letter that will be composed of the insurance carrier and will be given to you, the insured.

The idea of the letter is for you to sign it, releasing the insurance carrier of any liability of potential claims that may arise during this backdated period of time.

Most consumers need to backdate insurance coverage simply to show proof of insurance. Some may be looking to do it, though, because they actually got into a car accident a few days ago, and have no insurance to cover it.

A No Known Loss letter is a formal letter from the insured to the insurance carrier, stating that there have been no losses over that backdated period of time.

How Far Backdating Can Go

Most car insurance carriers will have a cap that they go by in terms of backdating coverage. The most that even the very daring car insurance carriers will go is back in time 45 to 60 days.

Once they get past that window of time, the vast majority, if not all, will simply refuse to backdate the coverage that far.

Knowing this as an insured is very important as you want to know what your limitations are and what is likely to be available to you, should you ever need to actually go down this path.

It is always possible to have car insurance coverage that is backdated.

You as a consumer need to keep your eyes and ears open, do comparisons across the different insurance carriers, and see where you are going to be able to get the coverage that you need, for the period of time you need it.

Backdated coverage is going to be harder to shop for than forward coverage policies, but it is certainly within the realm of possibility.

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