Car insurance is a mandatory requirement as per the Motor Vehicles Act, safeguarding you from financial losses arising due to accidents, thefts, and even natural disasters. Driving your car without an insurance cover will attract hefty penalties and you do not want to be in that place. Hence, every owner must buy a car insurance
policy to ensure legal compliance and safeguard their vehicle.
But have you ever wondered, what would happen if you bought two separate car insurance plans? This article explains its legality and offers advice on choosing double insurance coverage. Continue reading to know more.
The legality surrounding two car insurance plans
It is perfectly legal to have two car insurance policies. No law limits the policyholders to purchase two insurance plans for one car. However, it isn’t advisable to do so.
Generally, the same insurance company does not provide a second insurance cover for the same vehicle. The logical reason behind doing so is the principle of ‘unjust enrichment’ that allows policyholders to profit from raising insurance claims twice. On the other hand, some insurers may deem it unlawful to offer coverage for the same vehicle.
However, if you want to buy a car insurance policy a second time for the same vehicle, you may buy it from a different insurance company. Further, you will be required to pay a separate premium for this other insurance cover. Keep in mind that paying for two separate plans can be expensive and will increase the overall premium paid for the same vehicle. * Standard T&C Apply
Should you buy two car insurance plans for the same vehicle?
As discussed above, it isn’t illegal to have two insurance policies, but it is not recommended to do so. It may end up violating the terms of either or both insurance companies which can even lead to rejection of your claim. If the first insurer comes to know of the other insurance company, they may ask such other insurer to compensate for any future claims and vice versa. It may even lead to unpaid claims or even significant delays in the payment of compensation by the insurer.
What are the disadvantages of buying double insurance covers?
- Buying two insurance covers, be it comprehensive or third party car insurance, results in delays in the settlement of claims.
- Buying two insurance covers does not provide additional compensation for the damages as it benefits the policyholder in an unjust manner. Thus, only one insurance cover compensates for the loss.
- Two insurance plans simply end up increasing the premium amount and add no real tangible benefits.
* Standard T&C Apply
When is it that two insurance policies can benefit you?
When you buy separate insurance plans without an overlap in its coverage, only then can you benefit. For instance, you have a third-party car insurance plan from one insurer. To extend its scope, you purchase a standalone own-damage cover from the same or other insurance company. In this situation, both these insurance covers have different scopes and will kick in at different situations. Damages and injuries to a third person will be taken care of by the third-party plan, whereas the repairs required for your car are covered under the own-damage cover. * Standard T&C Apply
To conclude, buying double insurance covers for the same vehicle with overlapping coverage isn’t illegal but results only in confusion and unnecessary delays in settlement of claims. Hence, it must be avoided. When selecting different policies, a car insurance premium calculator
can be handy in helping you know the amount of premium before finalising the purchase. Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms and conditions, please read sales brochure/policy wording carefully before concluding a sale.