Whether you've obtained a second car for yourself, or you have someone in your household who needs to insure their car, you might consider having all the vehicles and drivers on the same policy. If you're already insured, you can usually have your existing car insurer make the change, but you can also shop around for multicar policies. Each insurer will have specific requirements for doing this, and many offer loyalty discounts to customers who insure multiple vehicles and drivers.
Here's what you need to know about multicar policies and when to use them.
Understanding Car Insurance Concepts
Unless you want to face consequences like paying fines, losing your license or getting sued for damages, you must ensure your vehicles have appropriate insurance coverage. Residents of Virginia and New Hampshire can forego car insurance coverage under certain conditions, such as by paying a large fee or putting money in a special bond. However, every other state requires car insurance under their laws and make you show proof if you're pulled over by the police or if you make certain transactions at the department of motor vehicles.
While options and coverage limits vary, your auto insurance usually takes care of property damage, medical costs and liability for damages. According to the Insurance Information Institute (III), at a minimum, state laws usually require you to carry coverage for medical payments to people you injure in an accident as well as damage to vehicles and other objects, like poles. You can get other coverage to help pay for damage – minus a deductible – to your car as well as medical costs for you and your passengers.
Car insurance costs take into account all the types of coverage your policy includes as well as the insurer's assessment of how risky you and other people and vehicles on your policy are. Adding cars with high values and people who have filed claims can lead to higher costs than adding less expensive, safer cars and drivers with no accidents and clean driving histories.
Exploring Car Insurance Policy Components
You can choose from some different policy options when you insure a car. These include the following types of coverage:
- Liability coverage: Known as the state minimum car insurance option, this financially protects you from the medical and property costs that result when you have an accident and hit another car. While this covers the car and driver you affected, it doesn't pay for your car or medical needs.
- Personal injury protection: If you or your passengers get hurt in an accident, this insurance option reimburses you for medical costs. This can help when your health insurance policy has a high deductible.
- Comprehensive coverage: This reimburses you for damages and losses that don't result from colliding with something. For example, this coverage helps if someone vandalizes or steals your car or if extreme weather damages or destroys it.
- Collision coverage: Whether you collide with a car, railing, pothole or building, this coverage option provides reimbursement for the damage your car sustains.
- Uninsured motorist coverage: Often used if you just carry liability coverage, this can help reimburse you for damages that affect you if the person who hit you has too little or no car insurance at all.
Multiple Cars on One Policy
Putting multiple cars on the same insurance policy can seem practical under certain conditions. It's often used if you have a partner living with you who needs to be insured or if you have a teenage son or daughter with a car. Progressive mentions that you might also add people who aren't family members as long as they permanently live with you, so this could allow you to put your roommate or friend on your policy.
When insuring multiple cars, you have some control over the coverage options you choose as long as you at least follow your state's and lender's minimum requirements. For example, you could get full coverage for all cars for the most protection, but this will be the most expensive. On the other hand, if one of the cars is only worth a few hundred dollars, you might decide to get a liability policy for that vehicle and use full coverage for the more valuable car.
Direct Auto Insurance explains that there's a limit to the number of cars that you can put on the same policy, and that all the insured vehicles need to sit on your property. This means that a family with more than four or five cars may need to get a separate policy for at least some vehicles. Further, a parent with a college-aged student who keeps their car at college most of the time probably won't have the option to add the student's car to the policy.
Benefits of a Multicar Policy
One of the main reasons to go with a multicar insurance policy is that as long as everybody on the policy has a good driving history, you could save significantly. American Family Insurance explains that many insurers have a multicar discount available that can help offset some of the insurance premium increase that occurs when you make such changes to your policy. This discount may grow with each car added or be a flat rate. Check with the car insurance company to get a look at the actual costs of adding the car versus just taking out another car insurance policy.
Read More: What Are Car Insurance Discounts?
Along with helping you save money, using a multicar policy can make it simpler for your family to manage their car insurance account. Rather than having multiple policies with different due dates, you just need to pay a single bill. You also get documentation from one source for all cars on the policy. You can log into your auto insurance company's website to track your coverage, get quotes for changes and contact customer service. You might also find it easier to avoid letting your coverage lapse when you have this simpler insurance solution.
Drawbacks of a Multicar Policy
If your main reason for adding the additional car to your insurance policy is to save money, keep in mind that may not work out as you'd like if you add a risky driver to the policy too. Starting out, adding a car with a driver who has accidents or received tickets for driving violations can lead to higher rates due to the higher risk and loss of certain discounts for safe driving. Even if you add a driver who's never had issues, you could see significant premium increases if they eventually have a driving incident and your policy features don't include forgiveness for it.
Peachstate Insurance notes that multicar policies usually come with specific rules on which vehicles and drivers you can add, so you might find this option doesn't work for your situation. For example, car insurance companies might require that all drivers on the policy be immediate family members, so you might not get to add a friend or roommate and their vehicle. Further, the number of vehicles allowed per policy might be limited to four or five, and insurers normally don't allow you to add business vehicles to your personal policy.
Deciding How to Proceed
Now that you understand how multicar insurance policies work and the pros and cons involved, you can decide whether to add the car in question to your current policy or obtain a new policy. In some cases, you might not have the option to add the car, while in others, doing so may not work out in your best interest.
If you're adding a car that only you or a low-risk driver plan to use, you can save and get conveniences with the multicar option. This remains true as long as any other driver on the policy doesn't have an accident or violation that raises your rates. However, since the rules can vary, you should check the insurance company's policies to make sure the vehicle and any new driver qualify to be added to the policy.
Since adding a risky driver and their vehicle can raise your rates now and in the future, going with separate policies could save you money in that situation. Ask the driver about past claims and driving incidents and get quotes before you agree to put them on your own policy.
Read More: How to Fight a Car Insurance Premium Increase
Adding Another Car to Policy
If you're adding the vehicle to your existing car insurance policy, insurance companies usually make the process quite easy. For example, according to Progressive, if you set up an account on their website, you can make policy changes like adding drivers and vehicles online. You can also call your car insurer's customer service number to do this task over the phone.
In either case, just have your policy number handy as well as important car and driver information such as vehicle identification numbers, driver's license numbers, Social Security numbers and desired coverage and deductible amounts. Your insurance company should tell you how adding the new car will change your insurance premiums as well as how much you'll save with the multicar discount applied.
Your insurer will ask when you want the effective coverage date to be, and this can often be immediate. They'll set up your payment plan or ask you to pay in full for the additional coverage to take effect. You should also receive new insurance cards that list the new vehicle. Since it could take up to a week for the cards to be mailed, check if the insurance company makes them available to print from your online account.
Getting a New Multicar Policy
If you need to both find a suitable car insurance company and take out a multivehicle policy, the process is more extensive. You should start by researching different car insurance companies to determine which offer the best pricing, customer service and reliability. You can check out reviews online, talk to insurance professionals directly or take advantage of comparison tools to weigh the pros and cons of different insurance companies.
Next, you can get quotes for car insurance rates through a handful of providers. This gives you more details on the costs and discounts you might get through each option. You can either call the insurance company, find the online quote tool on their website or use a car insurance quote aggregator. Regardless of which option you use, you'll need car and driver information for everybody who will be covered by the policy.
After you complete the questionnaire, you could get an immediate amount and the option to sign up, or you may need to follow up on the phone with an agent to proceed. After you answer all the necessary questions, choose the start date and pay the agreed amount to start the policy, you should receive your policy documents, such as declaration forms and insurance cards, through the mail, online or both.
- Progressive: Car Insurance FAQ
- Insurance Information Institute: What Information Do I Need to Give To My Agent or Company?
- American Family Insurance: Multi-Car Insurance: Can I Add Another Car or Driver to My Policy?
- Insurance Information Institute: 8 Questions to Ask Before Buying Auto Insurance
- Insurance Information Institute: Common Questions About Auto Insurance
- Peachstate Insurance: The Benefits of Adding Multiple Cars on One Policy
- Insurance Information Institute: What Determines the Price of an Auto Insurance Policy?
- Insurance Information Institute: What Is Auto Insurance?
- Insurance Information Institute: How to Find the Right Auto Insurance
- Insurance Information Institute: What Is Covered by Collision and Comprehensive Auto Insurance?
- Direct Auto Insurance: Your Guide to Multi Car Insurance Policies
- Progressive: Can Roommates Share Car Insurance?
- New Hampshire Department of Safety Division of Motor Vehicles: Insurance Requirements/SR-22
- Virginia Department of Motor Vehicles: Insurance Requirements
- StateFarm: Uninsured & Underinsured Motorist Coverage
- StateFarm.com. "Car Insurance Coverage Types." Accessed July 20, 2020.
- PolicyGenius.com. "Short-term and Temporary Car Insurance." Accessed July 20, 2020.
- Mass.gov. "Massachusetts Consumer Bill of Rights." Accessed July 20, 2020.
- TempCover.com. "Temporary European Car Insurance." Accessed July 20, 2020.
- U.S. Federal Trade Commission. "Renting a Car." Accessed July 20, 2020.
- DC.gov. "Things to Know About Car Insurance and Rental Cars Before Starting Your Road Trip." Accessed July 20, 2020.
Ashley Donohoe has written about business and technology topics since 2010. Having a Master of Business Administration degree, bookkeeping certification and experience running a small business and doing tax returns, she is knowledgeable about the tax issues individuals and businesses face. Other places featuring her business writing include Zacks, JobHero, LoveToKnow, Bizfluent, Chron and Study.com.