For most drivers, insurance is one of the least enjoyable parts of owning a car – so you might wonder why anyone would insure a car twice. In reality, if a car is insured twice, it’s usually because of an oversight or error – rather than a desire to pay two premiums!
Here, we’ll look at why you might end up with two insurance policies on one car if you’re a UK driver; what can happen if you do have double insurance; and what to do if two people want to insure the same car.
Can you have two car insurance policies?
It’s actually not uncommon for two insurance policies to be running at the same time for a vehicle. For many people, this will just happen for a short time – perhaps as you switch providers and there’s a day or a week where you’re still covered by your old insurer, but your new company’s policy is also in force.
In some cases, a car will have two insurance policies running because of how automatic renewals work. Insurance companies usually require notice if you do not intend to renew your cover with them for the subsequent year. If you miss this notice period, you might find the insurance starts again automatically – even if you’ve taken out a policy with a new company.
Does double insurance mean double pay-outs?
If you’ve been paying a second insurance premium for the same car and you’re involved in an accident, you’ll get a double pay-out, right?
As appealing as a double pay-out might sound, this isn’t how the law around insurance works.
Car insurance in the UK is based around the principle of ‘restitution in full’. So, if your car is involved in an accident, your insurance company will aim to put you back into the position you were in before the accident. Usually, that means getting a new car or having your damaged car repaired, as well as settling any personal injury claims or additional cover you might have.
If you were able to claim from two insurance companies, you’d be in a better position than before your accident. If, for instance, your damaged car was replaced with two new cars, you go beyond restitution in full – and into a position known legally as ‘betterment’.
A great deal of insurance fraud is based around this idea of betterment. If your garage was broken into and you claim for tools you never owned, you’re in a better position than before the incident – defrauding the insurance company. If two car insurance claims were made for the same accident, this would therefore also be considered fraudulent.
Since insurance companies communicate with one another to prevent fraud, you’ll never end up with two pay-outs. As such, having two insurance policies in place isn’t illegal – as you’ll only ever receive the full insured amount, never more.
What happens in the event of a claim?
While we’re on the subject of communication between insurance companies, it’s worth exploring what happens in the event of a claim when you’ve got two policies in place.
In some cases, you may simply be able to choose which insurer you wish to claim through. However, some insurers work with ‘contribution clauses’ – stating that if two or more parties protect the same vehicle, they will only be liable for part of the pay-out.
This is when things can get tricky.
It’s not uncommon for different insurance companies to decide on different valuations for your car. If you’re insured through two companies and they don’t agree on the valuation, they won’t be able to agree on how much should be paid out – and a dispute between the providers will result. Although this kind of dispute will be dealt with professionally with no input needed from you – it can take a long time.
During that time, your car is likely to be waiting for repair or replacement – and since courtesy car cover generally only runs for so long, you might find yourself without any transport, simply because you’d doubled up on your insurance cover.
Quite simply, since there’s no benefit to being insured with two companies, it’s worth avoiding.
Can two people insure the same car?
As car insurance is linked to both the person driving and to the vehicle, two people insuring the same vehicle is a little different to one person having two insurance policies for the same car.
The claims process becomes far easier. After all, even if there are two insurance policies, only one person could be driving the car when the accident occurred. As such, the driver’s policy will be used, and the other policy will carry on unaffected.
If you plan to drive someone else’s car, either using temporary cover, or a full annual policy of your own, you’ll simply need to let your insurer know that you do not own the vehicle. There are some insurers who will only let you insure a vehicle if it belongs to your spouse or partner, a parent, your employer, or a lease company – but others are more flexible.
It’s worth noting that insurers can sometimes consider you a greater risk if you don’t own the car you’re insuring. Rightly or wrongly, there’s an assumption that you would be more careful with a car that you’re financially responsible for – so you may find quotes are slightly higher if the car’s not yours. Don’t worry though; with Car.co.uk, you’re unlikely to have this problem – since our comparison service means you can pick the quote that’s best suited to you and your budget.