If you and your partner share the same car, it may be confusing figuring out the best way to go about insuring it. Should you insure yourselves on the same policy, or is it better to take out separate policies? Moreover, can you even take out separate insurance policies on the same car?
Yes. It’s perfectly legal for two people to take out separate insurance policies on a car they both drive. However, in most cases, it doesn’t make financial sense and can lead to unnecessary complications.
Car insurance policies primarily cover a single specific driver on a single specific vehicle. But in families, cars are often shared: spouses swap vehicles, teenage children borrow parents’ cars. Car insurance policies have a provision for this sharing: named drivers. Named drivers are other motorists who use the vehicle but drive it less frequently than the policyholder.
The presence of a named driver can sometimes increase the overall cost of an insurance policy if the named driver is riskier - either less experienced, younger, or with previous driving offences. However, usually adding a named driver to a policy is cheaper than taking out two separate policies on the same car.
In some rare cases, it does make more financial or practical sense to take out separate policies on the same car. Some parents want their freshly-licensed children to take out separate insurance policies on a family car so any accident they're involved in doesn’t impact the parent’s no-claims discount. Named drivers also don’t usually build up their own no-claims bonuses so holding a separate policy can help a young driver accumulate a discount that can significantly reduce their insurance costs when they purchase their own car.
Separate insurance policies can also help keep finances separate, either between partners or parents and children.
Even though it’s legal to have two separate insurance policies on the same car, you must never submit claims for the full amount on both policies for an incident. Doing so is insurance fraud. You must always claim on the insurance policy covering the driver involved in an incident.
If no one was behind the wheel at the time - such as if the vehicle is hit while parked or stolen - you can usually choose the policy you claim on. In these cases, you might want to choose the policy with better coverage or the one that has a higher valuation for the vehicle or with a less valuable no-claims discount.
Things can be more complicated if the policies are written with contribution clauses, which state that if the vehicle is protected by two insurance policies, the insurer is only liable for part of the payout. It’s up to the insurers to work out how much they’ll contribute to the claim. But this process can be contentious if they’ve used different valuations for the car. While the insurance companies are wrangling, you might be waiting for a payout. That could mean you're without a vehicle for weeks.
Therefore if you absolutely want to have two policies on a car, it’s sensible to use the same insurance provider for both to eliminate the risk of disputes about the claims.