Every state in the country has its own specific policy regarding minimum requirements for automobile insurance in order to drive legally in that state. But what if a driver has auto insurance in one state but has an accident in another? If a driver decides to move to another state, does their automobile insurance automatically cover them in their new state of residence? Is it even legal to have auto insurance in a different state than the one the driver lives in?
Your Car Insurance and the State You Live in
Most states require that drivers have automobile insurance issued by companies in the state in which their vehicle is registered by the DMV. Because insurance premiums are based in part on the location where the driver lives and operates his vehicle, some drivers think they can lower their insurance rates by registering and insuring their vehicle in a state offering the cheapest rates rather than the one they actually live in. Such activity is illegal and the best course of action if moving from one state to another is to inform your insurance company of your new address rather than keeping quiet and allowing your old address to remain in your insurance records. In the event you are involved in an accident in your new state of residence and you never informed your insurance company that you are now living in another state, you risk having your insurer deny your claim and drop your insurance coverage totally, making it very difficult for you to gain new coverage. Your state department of motor vehicles can advise you of the laws regarding registering your vehicle once you take up permanent residence in another state and this is a good time to also alert your present insurance company. In some instances, your rates can actually go down because you may be moving to a location considered more low-risk for an accident according to insurance company statistics.
Honesty is the Best Policy: Disclose Your Travels to Your Car Insurer
If you live in one state but work or travel in another, it’s also smart to be honest about this situation with your insurance company. In the event you have an accident in a state in which you are not a resident, your insurance coverage is usually valid and conforms to the requirements of the state where the accident occurs. But if you told your insurance company you don’t drive for business and have an accident in another state where you are actually working, you may wind up in hot water for not revealing the truth.
If moving from one state to another, if planning to travel extensively throughout states other than the one in which you reside, or if you live in one state but travel by car to work in another, it’s best to discuss these situations with your auto insurance agent in order to ensure that your policy terms will cover you in the event of an accident or other incident involving theft, damage or vandalism of your insured vehicle. Lying about where you live in order to obtain cheaper insurance is considered fraud and you may be liable for fines and in worst cases, even jail time if the insurance company can prove that you applied for insurance from one state while living or working in another for the sole purpose of getting cheaper rates.