On paper, auto insurance seems simple enough. Just get a car, pay for the insurance coverage and that’s it, you are all set. But when some very simple questions arise, the simplicity of auto insurance goes out of the window. With hundreds of terms and conditions and a barrage of laws and rules, auto insurance is extremely complicated at the very least. Since it is mandatory in almost every state (except two), having the right knowledge about it becomes equally mandatory.
Most of the time, getting an auto insurance policy for a car that you own is fairly simple. But complications arise when you consider a few questions. For example, is it safe to insure your car in another state?
There could be a dozen reasons why someone would want that, or perhaps they are in a situation where they need to be in another state but with a car that’s registered in some other state. This article will describe in detail everything relevant to the question and what you can do to insure your car in another state.
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Is it Safe to Insure Your Car in Another State?
No, it is not safe to insure your car in another state. Your car registration and the insurance should be from the same state. Not just safe, but getting insurance from a different state is illegal and in many cases, it is considered insurance fraud. Insurance fraud carries a hefty fine and jail time as well. So if you are planning to get an insurance policy from another state, don’t.
Different states have different coverage rules and regulations. Some states have a lower liability coverage limit than others, while some states require you to carry a personal injury protection plan. This is the reason why there’s no universal insurance policy that’s valid in every state. If your car is registered in one state, you need to have an insurance policy for that state.
Another reason why insurance companies don’t allow multiple state insurance coverage is because of the pricing. Different states have different rates of crime, theft, accidents, etc. This affects the price of the insurance policy. You can be paying hundreds of dollars more for the same coverage or less depending on the state you are in.
This is why insuring your car in another state is considered insurance fraud. So if you get in an accident and the insurance records show your car is registered in another state, not only will the insurance company deny any payment, but they will drop you off as well. You’ll be left alone with thousands of dollars to pay and a lawsuit waiting.
But not every case involves insurance fraud. There are genuine reasons why one might need to get car insurance in another state. So what are the possible ways of getting an auto insurance policy in another state?
When You Move to a Different
The most common reason when you’d need to get insurance coverage in another state is when you move to another state for a longer period. You’ll have to use your car and you cannot use your old insurance policy. The process of switching your insurance policy is simple with most companies. You can either talk to the insurance agent or do it yourself online.
But before you can switch your insurance policy, you need to register your car with the local DMV of the state. Different states allow different periods within which you must register your vehicle. It can be as short as 10 days in the case of Alaska to as long as 90 days in Colorado. The average time to register your car is 30 days.
Once the registration is done, it is smooth sailing from there. The insurance switch is done within minutes or hours for most companies. You might have to pay a little more than what you were paying before if the state you are in has a higher liability coverage limit or some other taxes. If you move to a no-fault state, you’ll also need to get a personal injury protection plan.
Getting a New Policy
If your insurance company does not operate in the state you are moving in, then you’ll have to get a new insurance policy. This does not skip the car registration step. You still have to register your car at the local DMV. After the registration is done, you need to look for better car insurance policies with lower car insurance premiums.
It is important to first get the new policy and then wait for it to get active before you cancel your previous one. Any insurance coverage gap is not taken lightly by insurance companies and it can increase your insurance rates as well. It is also important that you do not drive your car until the insurance policy is active and your vehicle has been registered in the new state.
Sporadic Travels
What if you make inter-state travel regularly and do not plan on moving to another state? What happens if you crash your car in another state? Before you get behind the wheel and drive off to another state, you need to talk to your insurance company first.
There are several modifications or insurance add-ons that can be done to the existing policy that will provide coverage for you and your car when you are in another state. But it all depends on insurance companies. Most insurance companies will cover you if you were out of town and got in an accident. Just make sure not to hide anything from the insurance company or else it will be considered insurance fraud.