Is Double-Dipping with Car Insurance Illegal?

Last Updated on April 30, 2020

You may be tempted to double-dip with car insurance. Double-dipping involves filing two claims for one incident.

Is double-dipping with car insurance illegal? Or is it just smart business?

It’s illegal to double dip car insurance. You cannot file two claims for a single incident, nor can you get paid twice for the same damage. It’s illegal to double dip with car insurance, and it could cause both of your claims to be denied.

Is Double Dipping with Car Insurance Illegal?

How Double-Dipping Works with Car Insurance

When you double-dip with car insurance, you get paid twice for the same incident. Some people have multiple insurance policies for one vehicle. Or, you might file a claim under your insurance policy and the insurance of the other driver.

Let’s say another driver hits you at an intersection. The other driver is at fault. You receive payment through the other driver’s insurance company. This payment covers your vehicle damage and any other costs. However, you decide to double-dip by filing a claim with your own insurer. Your insurer covers the same damage, and you receive twice the payment for the same incident.

Double-dipping assumes that neither the other insurance company nor the driver of the other vehicle is contacted about the additional claim that is filed. Theoretically, nobody knows about the double-dip except you.

It’s certainly possible to get away with double-dipping. Insurers lose billions to fraud every year. In many cases, however, you will be caught and punished for double-dipping.

Double dipping is illegal. You may lose more than just the value of your claim: you could also face criminal charges for insurance fraud. Double dipping is a type of fraud and may be treated as a felony offense.

Why is Double-Dipping Auto Insurance Illegal?

Double dipping is illegal for several reasons.

The main reason double-dipping is illegal is that it violates the idea of insurance. Insurance is designed to cover unexpected losses. You file one insurance claim to cover one loss. If everybody filed two insurance claims for one loss, then it would ruin the insurance industry.

Let’s say you’re in an accident. Your vehicle has $10,000 worth of damage. The other driver’s insurance company pays you $10,000 to cover this damage, and you repair your vehicle. From the insurer’s standpoint, you have been made whole again. Your vehicle is the same as it was before the incident. This is why we have insurance.

If you double-dip, then you receive another $10,000 from your own insurance company. You have already repaired your vehicle, so you pocket this extra $10,000. This is illegal, and it’s considered insurance fraud in every jurisdiction.

It’s Easy for Insurers to Spot Double-Dipping

50 years ago, it might have been easy to get away with double-dipping. Today, it’s not feasible, and drivers get caught double-dipping every year.

Insurance companies have strict claims tracking rules today. They track claims across the internet. Insurers communicate with one another regularly to reduce the chances of two claims being filed for the same incident.

Other Types of Double-Dipping with Car Insurance

Most double-dipping involves filing an insurance claim twice for a single incident – once with the other driver’s insurance company and again with your own insurance company.

However, there are other ways to double-dip with car insurance.

Some people try to take out two insurance policies on the same vehicle, for example. You might make a claim under each policy and receive twice as much compensation. While this may have been possible before the internet, it’s easy to spot today. Insurance companies share information – like with the CLUE database and DMV. They know which car is insured by which company, and they know which company has paid the claim.

To be clear, it’s legal to have two car insurance policies on the same vehicle. However, you cannot have two policies from the same company. You may be able to buy two car insurance policies from two different companies for the same vehicle. However, this could violate the terms of either insurance policy.

Even if you are able to obtain two policies for the same vehicle, you cannot make multiple claims for the same incident. You must make the claim under a single policy, and you cannot make that claim again with your other policy.

Other people double-dip by reporting a single incident multiple times. You might have damage from a car accident, for example, and make a claim to get that damage repaired. Then, you notice other damage later and file a second claim for the same incident.

Ultimately, however you engage in double-dipping, it’s always illegal.

Why Would I Get Two Insurance Policies?

Getting two insurance policies for one vehicle isn’t illegal. There are several reasons why drivers would insure the same vehicle with two different insurance companies.

For example, drivers want to make sure they have adequate coverage in an accident, so they buy basic car insurance from one company and extended coverage from another company.

Or, you might have two drivers for your vehicle. One driver might be considered high-risk, so he gets his own expensive insurance policy. The other driver is low-risk, so he gets his own cheaper insurance policy.

In most cases, it’s better to have one policy for one vehicle, although, in rare situations, it may be smart to get two policies for one vehicle.

Final Word

Insurers lose billions to fraud every year. Some of this fraud involves double-dipping, where policyholders file two insurance claims for a single incident.

Double dipping is illegal with all types of insurance – including auto insurance. Although some people get away with it, most double-dippers get caught. If you are caught double-dipping with car insurance, then you could lose the value of both insurance claims and face felony charges for insurance fraud.

James Shaffer
James Shaffer James Shaffer is a writer for and a well-seasoned auto insurance industry veteran. He has a deep knowledge of insurance rules and regulations and is passionate about helping drivers save money on auto insurance. He is responsible for researching and writing about anything auto insurance-related. He holds a bachelor's degree from Bentley University and his work has been quoted by NBC News, CNN, and The Washington Post.
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