Do I need separate car insurance for every car I own?

If you own more than one car, do you need more than one car insurance policy? That question is a little misleading, and reveals a misunderstanding of just how auto insurance works. A better question might be, “What kind of insurance do I need for each car I own?” You may have different types of policies for your different vehicles, depending on your circumstances.

Every car you own needs to be covered by insurance

The way you choose to handle that coverage can be very different from someone else, but no car you own should ever be without any form of coverage.

Having settled the fact that we must have insurance on each and every car we own, the question now becomes: what type? There are several different types of policies, and each is designed to meet different needs. A good way to illustrate this is with an example.

Suppose that you own three vehicles: your personal car which you drive to the grocery store and on vacations; a company car which you lease through your sole proprietorship; and a classic car which usually remains in storage. Each of these cars is probably going to be insured in a different way. To add to the fun, let’s assume your wife and son also each have a personal vehicle which must be insured, as well.

Starting with your family cars, you will probably want a “multi-car” policy which covers your three personal vehicles – yours, your wife’s and your sons. You would probably choose to have identical liability limits on the three cars, although you might vary in choosing collision or comprehensive coverage for the vehicles based on your needs. If your son’s car is an old “jalopy” which would cost more to repair than to replace if it were wrecked or stolen, you probably would not choose to invest in collision or comprehensive. On the other hand, it is imperative that you have this coverage on your wife’s new minivan!

Your company car would probably be insured through a separate policy altogether. This is because when you are depreciating your company vehicle for tax purposes, collecting fuel and repair receipts, and totaling up your costs for operating the vehicle as a deduction for your business, you want to include the insurance costs for your vehicle as part of the deduction. It is easier to do this if you keep your car insurance for your business vehicle completely separate from that of your household. That is not to say, however, that you cannot get a discount on both your personal cars and your business car by keeping all your business with the same insurance company and receiving a “multi-line” discount.

Your old classic car has different insurance needs. You do not need as much coverage on it for liability, but you may want to insure it against loss or theft because you have put quite a bit of money into restoring it. Classic and collector car policies for cars which are not driven much are very reasonable, and often you can get them cheaper from a classic car company than from your own insurance company. It is best, in this case, to compare quotes from both companies and see if you can save money by purchasing from another agent or company.

When your insurance bills arrive, you will receive one statement for your company car, one statement which includes all three personal cars, one for your classic car. Each will require a separate remittance. Some companies choose to send you separate declarations pages and statements for each of your personal cars in order to be clear what is covered for each car’s policy, but your insurance is all grouped together for those vehicles.

If you have a motorcycle, ATV, or RV, you may also have yet another insurance policy. These items are not covered under your regular car insurance, so you will have to buy separate policies for them.

Case Studies: Insurance Coverage for Multiple Cars

Case Study 1: Multi-Car Policy for Personal Vehicles

In this scenario, a car owner, let’s call him John, owns three personal vehicles: his own, his wife’s, and his son’s. John decides to opt for a “multi-car” policy that covers all three vehicles under a single insurance policy. He chooses identical liability limits for each car but varies the coverage options based on individual needs.

For example, he may choose collision or comprehensive coverage for his wife’s new minivan but exclude them for his son’s older car. By bundling these vehicles under one policy, John can enjoy potential discounts and streamline his insurance management.

Case Study 2: Separate Policy for Company Car

In this case, the car owner, let’s call her Sarah, has a company car leased through her sole proprietorship. Sarah prefers to have a separate insurance policy for her business vehicle to keep it distinct from her personal coverage.

By maintaining separate coverage, Sarah can easily include the insurance costs for her company car as part of her business deductions, simplifying tax-related calculations and documentation. Additionally, Sarah may also qualify for a “multi-line” discount by keeping all her business with the same insurance company.

Case Study 3: Specialized Coverage for Classic Car

Consider the case of Mark, who owns a classic car that is primarily kept in storage and rarely driven. Mark understands that his classic car requires different insurance needs. While liability coverage may not be a top priority for this vehicle, Mark wants to insure it against potential loss or theft due to the significant investment he has made in restoring it.

He explores specialized classic and collector car policies, often available at reasonable rates from classic car insurance companies. By comparing quotes from different providers, Mark can find the most cost-effective coverage for his classic car, potentially saving money compared to his regular insurance company.