Car insurance is meant to protect the owner of a vehicle in case it is damaged or destroyed through circumstances beyond their control. In the event of collisions, there is usually one party at fault which results in their insurance company paying for the damages.
In such cases, claims can only be filed with the insurance company which is paying for the repair or replacement of a vehicle. However, what happens if the insurance company of the driver who is not at fault is contacted and a claim is filed as well? That is called double dipping.
While there are no official statistics that lists how often it occurs, it is something that still happens to this day.
How Double-Dip on Insurance Works?
If you are the driver of the vehicle that is not at fault in the accident, the repair or replacement costs will be paid for by the insurance company of the driver who was at fault. However, if a claim is also filed to your insurance company, then you may receive an additional payment for repairing or replacing your vehicle.
Double dipping assumes that neither insurance company nor the driver of the other vehicle is contacted about the additional claim that is filed. If the money is paid to you through a reimbursement, then theoretically no one but you will know about the double dip.
Can you cover your car from multiple providers?
Besides, it is also possible that you may have more than one insurance company cover your vehicle. In fact, there is no restriction on the number of insurance companies that issue policies on your car. It is a practice that insurance companies disapprove. However, there is virtually no way for them to know if you have multiple policies on a single vehicle since information is only shared when claims are filed.
It should be noted that double dipping car insurance is illegal and you can be prosecuted under the law.
Why is Double Dipping Insurance Claim Illegal?
Double dipping is illegal for many reasons, but most importantly because you are essentially being paid twice instead of once for the coverage of your vehicle. Before the days of the internet, digital records, and fast communication between insurance companies, this form of fraud could be difficult to catch. So, while exact numbers are not known from that time, it was a big enough issue that it required specific laws to be passed in each state to punish those who cheated the system.
Claims are tracked easily today…
Today, it is far harder to get away with double dipping because of the internet and in particular stricter rules by insurance companies that make tracking their claims much easier compared to a few decades ago. Claims are now tracked more efficiently, and the communication between insurance companies helps to reduce the chances of two claims being successfully filed considerably.
However, double dipping auto insurance still occurs and for those who might be tempted it should be noted that such an act is illegal in all states and punishable under the law.