Multi-car insurance policies are often touted as a good way of managing auto insurance costs in a household with several cars. That may be true for many people, but it isn't a perfect fit for everybody. Here are three potential complications you should know about this form of insurance:
A Single High-Risk Driver Affects Everybody
A major drawback of a multi-car policy is that a high-risk motorist or car affects the other motorists too. This is because the group rate is calculated after factoring in the individual risks of all the drivers. For example, a teenage driver (teenagers are high-risk motorists) will drag up their parent's rates, and a parent with a powerful race car will drive up the rates of the other family members. If you have individual policies for each car, each risky driver will have to bear their own cross as far as the effect on their rates is concerned.
Big Renewal Bill Every Year
Another thing you should know is that having a multi-car insurance is like having the same renewal date for several cars. This may not be a problem if you only have a couple of cars to insure. However, it may be financially challenging for a big family with several cars since the size renewal check is proportional to the number of insured cars.
Don't forget that late renewal may result in higher premiums in the future. You will also be driving without insurance coverage during this interval, which exposes you to several penalties, including license suspension. All these penalties will affect every motorist named in the multi-car policy.
A Change in Circumstances Affects Everybody
Lastly, you should be aware that any change in any motorist's circumstance will affect everybody in the group. This is important to know because you are required to inform your insurer every time any of you experiences a significant change in their circumstances – change that affects their level of risk to the insurer.
For example, you need to inform the insurer when one of you moves away, moves house, or loses their garage spot and starts parking on the street. The risk that this will happen to you in a multi-car policy is higher than the risk that it will happen to you if you're in a single-car policy.
In short, when it comes to matters insurance, there is never a single perfect solution for all households. Talk to an insurance agent, such as one found at Family Insurance Centers, and explore the pros and cons of this form of insurance before making a decision.Share
16 August 2016
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