Can a car have two different insurance policies that are being paid by two different people?

June 17, 2006 9:02 AM

Can a car have two different insurance policies that are being paid by two different people? Is it possible to make insurance claims on both, if the car is involved in an accident? (More inside)

My girlfriend bought a car from my parents a year ago and bought a minimal car insurance policy. For whatever reason, after they sold it, my parents never stopped their automatic payment for the insurance policy on the same car. This came to light because my girlfriend was involved in an accident a few days ago, and now we need to know the best way to go about making claims.

The policy my parents had was much better than the one my girlfriend had, but they aren't the owners of the vehicle anymore, and weren't involved in the accident. So I don't know if they are able to make a claim on the accident.

Anyone have any suggestions or advice?

posted by JFunk2800 to Travel & Transportation (8 answers total)

You will only ever get a payout from one of them, if that. It can get quite tricky if you have two insurance policies since each insurer will try to shift responsibility onto the other. You could even end up in a situation where each of them says the other is responsible, and leaves you to sue for the settlement.

This is the kind of situation where a knowledgeable broker is a huge asset.
posted by unSane at 9:34 AM on June 17, 2006

In some contexts, you can have two separate insurance policies, with the one deemed "secondary" paying (up to its own coverage limits) what the one deemed "primary" won't pay.

However, standard car insurance terms make the policies not transferable to a buyer, so, most likely, your parents' insurer is entitled not to pay the claim.

That doesn't mean that you're totally out of luck. There's a chance that your parents' insurer might decide to step up to some of the otherwise-uncovered costs even if they have a right not to do so. There's also a chance that the insurer might choose to, or even be legally obliged to, refund the premiums your parents paid after they sold the car.

The key thing is for your parents to make an full and honest accounting of all of the circumstances. What they definitely don't want to do is to get paid on claim when the insurer is under the impression that they still own the car ... because the legal and financial consequences if that is revealed in the audit process will be unpretty.
posted by MattD at 10:12 AM on June 17, 2006

What MattD said. And, don't commit insurance fraud.
posted by SeizeTheDay at 10:48 AM on June 17, 2006

Provided that the title was signed over to your girlfriend when she bought the car (i.e., there wasn't some sort of loan arrangement where your parents kept the title until the car was fully paid off), your parents do not have an insurable interest in the car. Accordingly, it is highly unlikely that their poilcy will cover the damages. Nonetheless, they should be able to get their past policy payments reimbursed by the carrier.
posted by ajr at 12:29 PM on June 17, 2006

As ajr says. Your parents should get their premiums back, as with any erroneous overpayment. Your girlfriend will get paid by her policy.
posted by jellicle at 1:16 PM on June 17, 2006

Each state has a set of rules for determining which of two insurers on the risk is primary and which is secondary. The secondary policy would have to pay only what the first does not have to pay, usually because of limits.
posted by megatherium at 3:53 PM on June 17, 2006

Your parents will get their premiums back and your coverage is your gf's. Maybe your parents like her enough to contribute the amount of the refund they are entitled to towards the accident repair?
posted by JohnnyGunn at 8:02 PM on June 17, 2006

I have License to sell insurance in NJ, and I can tell you it is possible to double insure a vehicle or house, its what I believe they call "double indemnity" It is possible for say a husband to go out and get car insurance for a car and the wife to go and get it by accident also and never realize it. In your situation the car is not double insured because you can not insure a car that you do not own or are leasing etc. The minute the car was turned over into your girls hands ie the title to it was signed over to her it was her property and you parents could no longer insure it. At least thats how it would work in NJ. So even though your parent paid for the insurance it would not be insured. So A your girls policy will cover the damage, and B you should get a copy of your girls policy showing the date it was enforced and send that off to your parent insurance company for a refund.
posted by antisocialiting at 9:12 PM on June 17, 2006