Jessica Sautter is a Content Writer for CarInsuranceCompanies.com with a Bachelor’s Degree from Eastern Michigan University in Elementary Education with a Major in Reading and a Minor in Mathematics.

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Chris Harrigan has an economic degree from Limestone College and an MBA from Clemson University. He previously managed auto insurance claims for Enterprise Rent-A-Car. Currently, he is using his business and insurance expertise to provide insurance data analysis and visualizations to enhance the user experience.

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Reviewed by Chris Harrigan
Former Auto Insurance Claims Manager

UPDATED: Sep 29, 2020

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Key takeaways...

  • While it is possible to buy multiple insurance policies in your name, it is not always the best decision if you have a restricted budget or you value convenience
  • In every state, officials have passed auto insurance laws that require drivers and vehicle owners to carry at least a minimal amount of liability protection
  • You can apply for and purchase more than one policy on the same car, but the problem will present itself when it is time to file a claim
  • If you are a dual resident in more than one state and you have a car in each state, you cannot insure these cars on the same policy

Is more than one auto insurance policy necessary for one person or family? The answer depends on several different factors. If you are in the process of buying insurance for all of the cars that are registered in your name, you might be wondering if you should or even can buy separate policies for each of the cars through different carriers.

While it is possible to buy multiple insurance policies in your name, it is not always the best decision if you have a restricted budget or you value convenience. Start comparing car insurance rates now by using our FREE quote tool above!

There are a few reasons why you should have more than one car insurance policy. In fact, some car insurers that have been around for decades still sell single car insurance policies to their clients so that every vehicle has its own policy number.

There are pros and cons to doing business this way, and you should learn about these advantages and drawbacks before you start to shop for coverage. Read on, and learn more about the rules surrounding carrying multiple policies, the scenarios when having more than one policy is best, and why there are drawbacks to this choice.

Table of Contents

What are the rules about who can insure a car and how many policies can be purchased?

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In virtually every state, officials have passed auto insurance laws that require drivers and vehicle owners to carry at least a minimal amount of liability protection.

Some may think that just anyone can buy insurance, but that is not the case. There are underwriting guidelines that state that anyone who buys an insurance policy needs to have an insurable interest in the vehicle that they are covering.

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What is an insurable interest?

An insurable interest means that the person who is covering the car would suffer a financial loss if something happened to the car or if damages were caused to another while in the car.

This means that you must be the registered owner of the car or a co-signer to be listed as a named insured on the policy.

The rule restricts a friend, a neighbor or a random person from insuring your vehicle and creating an issue if you ever need to file a claim.

What is a named insured?

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A named insured is more than just a driver who is permitted to drive a vehicle. Typically, a named insured on a car insurance policy is the owner of the vehicle or a co-owner.

In very straightforward terms, the named insured is the person who owns the policy and who is responsible for keeping the premium payments active.

When you are listed as the named insured, you are the only person who can make changes to the policy. You are also the person that the claims checks will be written to if you ever file a claim and there is not a loss payee listed.

Can you buy more than one car insurance policy on the same car?

When there is more than one named insured and these parties are not married, it can create issues surrounding who needs to carry a policy on the car. This is when one car may wind up having more than one policy in different names.

It may not be illegal, but it is frowned upon by most insurance companies. You can apply for and purchase more than one policy on the same car, but the problem will present itself when it is time to file a claim.

If you review the policy terms and conditions, it will say that you cannot receive multiple claims payments from more than one insurer for the same loss.

This is called “unjust enrichment” and means that the claimant will profit from the loss instead of just recouping. The entire purpose of insurance is to be made whole and not to profit when the claim that you file is paid.

Each insurer that covers the car will try to avoid paying a claim and there will be a time-consuming battle. This is yet another complication of double coverage.

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Can you carry multiple policies when you own multiple cars?

Carrying more than one insurance policy on the same car is frowned upon and can be construed as fraud in some situations. While this is true, it is completely legal to buy multiple policies when you are covering a different car with its own unique VIN on each plan.

There are a variety of reasons why you would need to do this, but not all scenarios will create a need for you to have a handful of insurance policy numbers to keep track of. Listed below are a few scenarios where it should be considered:

When There Are Different Registered Owners

If you have more than one car in your household, you have to consider who the registered owner and title holder of the car is before building a policy.

One of the biggest reasons why some companies offer only single car insurance policies is because it creates less of an issue when listing a named insured.

If married couples, parents and children, sisters and brothers, and other close people both own a car, you can list both as the named insureds.

If you own one car with someone and another by yourself, having your separate policies is best so that there are no problems with the DMV when it comes to how your coverage is reported.

When You Have Cars in Different States

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Most states have financial responsibility laws. These laws basically state that you must be able to prove that you can pay for damages that you cause while you are operating your car registered in that state.

If you are a dual resident in more than one state and you have a car in each state, you cannot insure these cars on the same policy.

This is because each policy is written under the laws within that state and buying coverage from a carrier in one state for a car registered in another will not satisfy the law. When this happens, you need two separate policies each from a carrier licensed by that state’s department of insurance.

When the Company Will Not Insure a Specific Type of Car or Driver

There are high-risk drivers and high-risk vehicles. High-risk drivers can be young, uninsured, or have a long list of violations on their driving record. High-risk vehicles may be capable of high speeds, expensive or have a unique classification.

If you are trying to cover a car for a driver in your household that will disqualify you from eligibility with your company, you may want a separate policy. This will cover the car and the driver and allow you to exclude the high-risk driver from your primary plan.

A driver exclusion eliminates coverage for the driver and does not allow their record to affect your eligibility.

If you need coverage for a classic or luxury car, buying a separate policy from a specialty insurer may be ideal for special coverage at a bargain price. Just be sure to choose a reputable insurer in the specialty market if you are covering a specialty car.

Drawbacks of Buying Separate Policies

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Buying a separate plan is not always best. There are drawbacks for the average person who has their cars in the same state.

  • You cannot qualify for special multi-car discounts when your cars are insured with different providers. These discounts are applied to each car on the policy and can save you as much as 30 percent. If you have been with your insurer for some time or have another line of insurance, you will also miss out on loyalty discounts and multi-policy discounts. Missing these will definitely increase your expense.
  • Making changes and payments will not be as convenient. You will need to make several calls to make payments or to do something simple like changing your address. Juggling different policy terms can be hard and confusing when you have different renewal dates and payment due dates. If convenience is important to you, you should carry the same policy or manage your policies could become a job that requires special planning.

Now that you know the rules surrounding multiple insurance policies and when you should and should not apply for a separate plan, it is time to start doing your research.

If you are shopping for coverage for a single car or multiple cars, start comparing car insurance rates now by using our FREE quote tool below! You should comparison shop and see if you can find a company that offers competitive pricing on each car.

References:

  1. http://finance.zacks.com/can-car-two-separate-insurance-policies-two-different-people-10938.html
  2. http://carinsurance.about.com/od/PolicyFundamentals/a/What-Is-A-Named-Insured.htm
  3. http://legal-dictionary.thefreedictionary.com/unjust+enrichment
  4. http://classroom.synonym.com/can-car-two-separate-insurance-policies-two-different-people-10640.html
  5. http://www.investopedia.com/terms/f/financial-responsibility-law.asp
  6. http://carinsurance.about.com/od/High-Risk-Insurance/a/What-Is-A-High-Risk-Driver.htm
  7. http://www.insurancejournal.com/news/southcentral/2015/02/19/358090.htm