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Why is it required that my liability limits on my collector policy can’t exceed those on my daily driver policy?
Posted by Rally Classic Auto on
The reason this is required all comes down to claim time and how your auto policy is able to provide coverage for you. An auto policy provides coverage for not only your car but also provides coverage for you as a driver, a pedestrian and a passenger. There are 3 different scenarios that the collector auto insurance company is attempting to minimize their potential exposure.
You are a driver of a rental car or a borrowed car. if you were to drive another car that you do not own and get into a car accident, there is a potential that your auto policy could end up paying for that accident. Typically the first policy to respond in an accident is the policy that is actually insuring that vehicle. Your policy would then come in second if the policy covering the vehicle has depleted its’ limits.
You are a pedestrian and you are crossing the street and get hit by a car. The driver of the car has very low limits or no insurance for themselves or the vehicle. If you had serious injuries, you would need to use your uninsured or under-insured coverage on your policy. Your daily auto policy should be the 1st in line to cover your injuries. If your collector policy had higher limits than your daily driver auto, you would then want to use those limits to cover your injuries.
You are a passenger in a car and you are involved in a serious accident. Again, the coverage on this accident are not adequate for the loss. You could then put in a claim under your own policy for the medical payment, uninsured or under-insured portions of your policy (this would be for your injuries). Your daily driver policy should be the policy used for this scenario but if you had better limits on your collector policy. You could potentially use that policy to cover your injuries.
In all of these scenarios your daily auto policy should be the policy that is used for the claim. Your daily driver policy is the policy that is providing coverage for your regular and daily driving and it should be considered your primary policy with the collector policy being secondary. If the collector had higher limits, it would then have to act like it was your primary policy. The intention of the collector policy is for it to be a secondary policy. By requiring that we match your limits to those that you have on your daily driver car or provide less limits, it limits the exposure that the Collector Company has to the above types of losses. This requirement is what helps keep the premiums lower on collector policies.
Example: Henry has a limit on his insurance policy of $50,000 Bodily Injury. Bob has an insurance policy that has $300,000 for Bodily Injury. Bob is driving Henry’s car. Bob has a serious accident with Henry’s car which results in injuries that add up to $100,000. Henry’s policy would be used 1st for the accident and it would pay $50,000. This would leave a remaining $50,000 that would need to be covered by Bob’s policy (this would only be true because he was driving). Bob’s insurance policy would then pay the remaining $50,000. If Bob had a collector policy with a $300,000 bodily injury limit and a daily driver policy with a $300,000 limit, the daily driver policy would be 1st in line to cover this loss.