Many drivers believe that when they drive uninsured and get into an accident, they can get an insurance provider to cover it. The trick is to start a new policy with an insurance agent and request that they push the coverage back to a few weeks ago. If the company agrees to backdate the driver’s policy, it is liable to cover the driver’s accident when they make a claim.
But, can insurance companies backdate premiums on policies? Yes, but not for the situation just mentioned. Backdating can be possible under different circumstances. This guide tackles when insurance companies are more likely to backdate policies and why most of them don’t.
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What is Backdating?
Backdating means purchasing a car insurance policy with a contract dated earlier than your actual date of signing. Car insurance usually starts when you buy the policy. With backdating, the policy begins earlier than when you started paying.
When is Backdating Allowed?
Most car insurance companies will only backdate a policy for very particular situations. When backdated policies are actually approved by insurance companies, it’s for non-accident related situations, such as:
- A driver forgot to change their address on their policy after moving
- A driver needs to provide proof of insurance during a specific time period where they had a lapse in coverage
In most cases, backdating is rare regardless of the reason it may be needed. Most insurers will also not backdate unless they know a policyholder has experienced a brief lapse in coverage and will not file a claim for that time period.
Can I Get a Backdated Policy After Getting Into a Car Accident?
No, you cannot get a backdated policy after a car accident. There’s a primary reason for this. Many drivers who purposefully and routinely drive without car insurance often try to sign up for coverage so that an insurance carrier will pay for their injuries and damages after a wreck.
This is considered fraud, so insurance companies don’t backdate policies for fear that a sudden claim will pop up. If you drive without insurance, get into a car wreck and then sign up for a new policy with an insurance company, the provider will likely not backdate it – regardless of whether or not it knows about the accident.
Why Won’t Most Insurers Backdate?
If a provider accepts a backdate, it is liable and obligated to cover that period, which could cause many problems for the company. For example, if a driver received backdated auto insurance and suddenly makes a claim for an accident they caused during that newly covered period, the insurance company would face a significant loss in money.
So when an insurance provider does agree to backdate a policy, it will likely extend a No Known Loss letter to protect itself.
What is a No Known Loss Letter?
A No Known Loss letter is a primary condition that many auto insurance providers will accept when they concur to backdate coverage. This is an official letter that the insurance company will write and give to you.
The letter absolves the company of any responsibility for plausible claims that could be made within this retroactive period. So, if you sign up for coverage, get a backdated policy and try to file a claim for a car accident, the company will not have to pay for it. But, the provider may start a fraud investigation against you.
No Known Loss letters are still good for policyholders that need backdated policies for reasons not related to car accidents, because they help make backdating possible.
How Do I Know if My Provider Allows Backdating?
It’s essential to remember that many insurance companies do not offer backdating services under any condition. Of the companies that do offer these services, each has specific rules about when and how it will allow it.
Backdating is more likely to happen for policies in health insurance and life insurance, and for various reasons. So, if you’re interested in backdating your policy, check with your insurance company first to see if it’s an option.
How Far Back Can You Backdate an Insurance Policy?
Most businesses will only agree to backdate auto insurance coverage by 45 to 60 days in the past. This is the bare minimum, and it’s still very risky. If you have any type of loss during that period, the insurance company can deny your claim.
Again, the provider can deny your claim because it was not made aware of the accident when you originally applied for coverage and has likely already given you the No Known Loss letter.
What are the Alternatives to Backdating?
The truth is, you really don’t want to have to backdate a policy. The only way to protect yourself is to make sure you have continuous coverage. Since providers have protective methods in place to ensure they don’t have to pay for accidents under backated policies, you would have to pay out of pocket for any uninsured at-fault accidents that happened.
Even if you don’t get into an accident, if you are caught driving without car insurance, there are definite penalties that include:
- Higher insurance rates
- License suspension
- State-mandated driving courses
If you don’t want to deal with any of these, it’s critical to make sure you always have continuous car insurance coverage.
There are some things to remember when trying to get continuous car insurance coverage.
- You must ensure that you’re insuring your vehicle for the correct time. If you don’t insure your vehicle for the entire time you plan to drive it, you may have to pay a higher premium when you decide to get insurance again.
- You need to insure your vehicle for the correct amount of coverage. If you don’t have enough coverage, you may be liable for the damages if you’re involved in an accident.
Knowing your needs and potential risks is essential to having the right car insurance coverage before you hit the road. If you follow these tips, you should be able to get continuous car insurance coverage without any problems. Be honest with your insurance company and have the right amount of coverage for your needs.
Our Recommendations for Auto Insurance
If you’re looking for an auto insurance policy, we recommend comparing multiple insurance quotes from at least three different companies. A comparison tool can help expedite this process for you and help you get the best possible deal on your auto insurance.
We also have useful information about some of the best national insurance providers that offer cheap auto insurance: GEICO, Progressive and USAA.
GEICO: Best Car Insurance Coverage
GEICO is one of the most well-known and popular insurance companies in the United States.
In addition to its low rates and excellent customer service, GEICO offers a variety of insurance products that include rideshare coverage, classic car coverage and mechanical breakdown insurance.
The company also offers discounts such as:
- Air bags
- Anti-lock brakes
- Anti-theft system
- Daytime running lights
- DriveEasy (in select states)
Progressive: Best for High-Risk Drivers
Progressive is known for offering affordable rates to high-risk drivers, which makes it a popular choice for drivers with speeding tickets, at-fault accidents or any DUIs on their records. Some of the provider’s great add-on coverages include rideshare coverage, loan/lease payoff and accident forgiveness.
Progressive also features a wide range of discounts that include:
- Continuous insurance
- Teen driver
- Distant student
Read more: Progressive insurance review
USAA: Best for Military Families
USAA is a unique insurance company that only serves military members, veterans and their families. In addition to having an excellent reputation and some of the best rates in the industry, USAA offers great add-on products like accident forgiveness, gap insurance and rental reimbursement.
Some of the discounts that USAA offers include:
- Length of membership
- Military installation
- Bundle with home or renters
FAQ: Can Insurance Companies Back Date Premiums?
What happens when an insurance policy is backdated?
The policy legally covers the policyholder during a time before the policyholder signed a contract for coverage. Typically, backdating is very rare, and not all insurance providers allow it. Sometimes, policyholders request backdating for proof-of-insurance purposes.
Do I need to provide proof of insurance when I get pulled over?
Yes, you will need to show your insurance card if you are stopped by a police officer or are involved in an accident.
How much car insurance do I need?
The amount of car insurance you need will depend on a few factors, including your state’s requirements, the type of vehicle you drive and your personal circumstances. Most states require minimum liability coverage, but liability insurance only covers the other driver’s injuries and property damages in the event of an-fault accident. Policyholders should get collision and comprehensive insurance to take care of damages to their own car and body in an accident.
What happens if I don't have car insurance?
If caught driving without car insurance, you may be subject to a fine or other penalties. In some states, you may even have your license suspended or your vehicle impounded.
The Detroit Bureau collects data from every major car insurance provider to formulate rankings of the best insurers. Our in-depth rating system considers market share, coverage, auto insurance rate estimates generated by Quadrant Information Services, customer satisfaction and ratings from industry experts. Each insurer is given a weighted score in four categories, as well as an overall score out of 10.0.
We recommend auto insurance companies based on these rankings, but we also encourage you to perform your own research and compare quotes to find the best coverage.