I switched car insurance companies last week. I have not yet canceled my old policy, since I wanted to be cautious and wait until I had proof of insurance from my new company. Let’s say I am in an accident. Who would pay? Both policies are similar (assume they are identical). Can I submit a claim to each and profit?
Claiming the same repairs on both policies would be fraud. AFAIK no insurance policy requires that you file a claim on it, so generally as long as both policies are active whichever one you file the claim under would pay according to its terms. Those terms may include subrogation.
Really? Even if both policies were paid up and all? How is that different from having two life insurance policies both paying my beneficieries when I die? OK, I can see the difference as far as it costing $X to make the car good again. Is there somewhere in a standard car insurance policy that specifies one policy per vehicle?
BTW I just check my mail and my insurance card from the new company arrived (not GEICO, but I did save a ton of money), so I will cancel the other policy now. This question still has me wondering, though.
I should think the new company would pay out. You can cancel the old insurance as of the date you started your new insurance and get the premium for those few days back.
As for the difference between life insurance and auto insurance–Car parts cost real money and a definite price tag can be placed on them. Your car insurance is there to buy or fix your car parts and set your financial situation back to approximately what it was before the claim. You can not put a price tag on a human life, nor can the recipient of the life insurance have their lives put back to approximately the place they were before your death. That’s why you can have multiple life policies but only one auto policy, because you would ultimately gain from your auto claim being paid out twice but you can never “gain” from a death. (Anna Nicole Smith not withstanding.)
Auto insurance (and fire insurance) are indemnity policies, i.e. they are designed to put you back to the condition you were in before the loss occurred. They are not designed to allow you to make a profit.
If it were legal to claim on multiple policies on the loss, what would prevent someone from buying 100 homeowner’s policies and then torching their own home a week later? Answer is nothing. This is why duplicate claims are insurance fraud. Needless to say if multiple claims on multiple policies were legal, fire statistics would go all to hell as people would go into the arson for profit business.
Life insurance is not an indemnity contract, and therefore is not limited to just one contract on an individual’s life. Some companies may however, refuse to issue what they consider excessive amounts of insurance. ($10,000,000 on an infant for example)
Thanks guys! I understand now.
I can see it now:
“Inspector, it seems that the owner of this dwelling, Mr. [reads from his notes] Smith, recently took out over seventeen million dollars of homeowner’s insurance on this double wide. In thirty-eight separate policies.”
“Wow. What a lucky break for that Smith guy. It’s almost as if he knew that his house would burn down. I guess when you keep as many cans of gasoline around as he seemed to, it’s wise to cover your risk.”
If you have two valid policies in force you are required by contract to notify each carrier.
In most cases if the coverage is the same they will each pay 50 % of the claim.
This happens more often than you think.
gee…thanks, Mr Peabody. (cool name)
It’s not necessary to do this. In common-law provinces in Canada (where my insurance experience is from), a new policy automatically supercedes the previous policy. Even without proof of insurance on-hand. However, your new company should have given or faxed proof of insurance immediately.
Evidently, health insurance works the same way – Blue Cross/Blue Shield keeps pestering me with requests to verify that I don’t have any other relevant insurance to cover the claim in question (to the point that, frankly, I think they’re just trying to find a loophole through which to weasel out of their contractual obligations).
This pisses me off; I can see why it should be illegal to “make” money on multiple claims, but I would think that one should be able to make claims upto the “full” amount of value of the vehicle.
I had 2 health insurances when I worked at a university (in the 80’s). One paid 85% of a claim. I was allowed to submit the other 15% to the other insurance.
So I was “100%” covered.
Ah, maybe that’s what Mr. Peabody’s post meant…never mind.
Of course you can recover up to the amount of your loss. You cannot make a profit. Last time I checked 50% + 50% = 100%
Well the question I have with this is that if you are double covered with the car insurance would you still have to pay a deductable?
With medical insurance you are almost always 100% covered if you are double covered including the deductable.
Whether you pay a deductible depends on the terms of the policies. If both policies have deductibles one doesn’t just go away just because you have another policy.
I would swear that I have been typing in English, but apparently not.
I will try one last time before I start banging my head against a wall.
You can collect up to, but not more than 100% of the loss if you have multiple policys on a loss.
Allow me to give you a real life and not uncommon example of this in action.
Husband has group insurance, covering himself, spouse and kids. Wife works and has health insurance, covering herself, spouse and kids.
Husband has a heart attack
His insurance pays except for deductible, co-pay etc. Lets out of a $10,000 bill they pay $7,500. Her insurance would be secondary and pay the other $2,500. (This assumes that all of the $10,000 are in fact covered expenses.)
So let’s review shall we?
Did his insurance waive a deductible? Check, they did not, they left $2,500 not covered
Did her insurance company waive a deductible? Check they did not pay on the first $7,500 covered by the other insurance company. This $7,500 was applied to the second companies deductible.
Did the insured make a profit on the deal? No he did not. Where I went to school, $7,500 + $2,500 = $10,000 the amount of the orignal bill.
Now if he had not told each company about the other’s coverage, and attempted to collect policy limits from each, his re-inbursement would have exceeded the $10,000 of the bill, and he would have been guilty of insurance fraud. A felony in many states.
(who used to sell insurance)
And indeed, reading my American (Illinois) auto policy, I find similar language:
I’ve never heard that this is a matter of law in the United States, and the fact that my insurance company saw the need to include it in the policy leads me to suspect that it isn’t. But either way, by law or by contract, I can’t have two primary policies in force on the same car.
So while the information posted by MrPeabody is entirely correct, for situations covered by more than one insurance policy, with respect to personal auto insurance it will often be the case that such situations do not arise.
“You can’t profit from insurance”
Actually that is not true in all states; it is possible to profit from your insurance in a few limited circumstances
One example in my state is med pay coverage. Med pay will pay reasonable medical bills regardless of fault and not withstanding any other payments you receive.
For example let’s say you have $10,000 med pay coverage on you personal car insurance policy. You are driving down the road and are hit from behind by another car. Your car is totaled and you have medical bills in the amount of let’s say $10,000.
You can immediately file against your own med pay insurance for payment of your actual bills. You will receive a check from your own company.
The other drivers insurance will pay to fix your car and pay the medical bills again this along with what ever you can get for pain and suffering lost wages ECT. That settlement may be $30,000 depending on how injured you are.
This may be unique to my state but is my understanding this applies in most state that do not have no fault
Insurance coverage is dictated by policy provisions and state case law. Every time a judge make a ruling the coverage an insurer thought they had in a policy can change.
Perhaps the completely and utterly unwarranted snark you’ve been previously struggling to contain has interfered with your otherwise impeccable communications skills.
In case you missed it (or if not enough of the thread was in English), the type of insurance under discussion here was auto insurance. Examples drawn from health insurance may or may not be relevant. Having worked for multiple insurance companies, including health, auto and homeowners, I can assure you that not every insurance contract picks up deductibles and copays as secondary. For example, if the primary policy has a $20 drug copay and the secondary has a $15 copay, the secondary policy is going to pay $5, not $20.
So, as I said, whether a deductible would be paid by the policy holder with two policies depends on the terms of the policies.