Where your car 'lives' affects your car insurance

Richard J. Koreto

You live in New York but you have a cottage on Cape Cod in Massachusetts. You own a car that spends part of the year at each place or perhaps a second car that stays permanently at the vacation home. But in the opinion of your car insurance company, where do your cars "live"?

The car insurance rates may be much lower at one home than at another, but that doesn't mean you get to pick and choose. Your rates will be determined by where your car is "principally garaged." In other words, where is your car parked the majority of the time?

Show us proof

Where a car is "principally garaged" -- your main home or a vacation home -- determines how much you pay for car insurance.

Mario Morales, manager of corporate underwriting at MetLife, says: "The insurance contract will be governed by where the car is registered." Some insurers will even ask to see the car's registration before issuing a policy.

Jim Berry, vice president of insurance operations at Safety Insurance, says his company also abides by the "garaging" principle, regardless of whether your car is parked most of the time at your primary home or a vacation home. Safety will ask for proof of residence -- whether it's for primary or vacation home -- such as a driver's license, deed, rental contract, utility bill or credit card bill. That's meant to prevent a car owner from using the address of a relative or friend who lives in an area with lower rates.

Where is your car 'principally garaged'?

To be able to claim a particular residence, it must be the car's true "home," not just where it's parked in July and August, according to Morales.

But what is really meant by "principally garaged"? If your car goes back and forth between two homes, six months and one day determines where it lives most of the time, says Tully Lehman, a spokesman for the Insurance Information Network of California.

It's a fine point, but it can mean big dollars. As most drivers know, insurance rates can vary from one area to another, but state law also can play a role: In California, according to Lehman, the minimum liability requirement for car insurance is far lower than in neighboring Oregon, a big issue for Golden State residents whose cars are parked at Oregon vacation homes. So a car that is registered at an Oregon vacation home must have coverage that meets Oregon's liability limits.

Honesty is the best policy

Costs like that give car owners a reason (although not an excuse) to lie. However, insurance companies often don't know you're lying -- until you get into an accident.

"When a loss occurs, the insurers start looking at the details," Morales says. "Has the car really been where you say it's been? If the car is registered in your vacation home but the claims are for accidents that occurred near your primary residence, they’re going to start asking questions."

The penalties if you're caught vary from state to state. You may not get full coverage for repairs if you're caught lying, and your policy even may be canceled. Officials note that you also could be billed retroactively at the higher level as well.

Mark Carrasquillo, an account executive at insurance brokerage E.G. Bowman Co., also stresses the importance of being honest with your insurer, but he says you may have some leeway. For example, if you have a house in Connecticut and an apartment in Manhattan, you can realistically say that your car "lives" in Connecticut and you regularly make that long commute to work. Of course, if you park your car mostly in Manhattan, you'll have to insure it there.

Crossing state lines

But you don't need separate insurance companies or separate driver's licenses to buy insurance for a car where you are not a year-round resident. For example, Angela Cellucci-LeBlanc of the Harrington Insurance Agency lives in Massachusetts and also has a home in Florida, but a Massachusetts company issues the policies for both her Massachusetts and Florida cars. In fact, Cellucci-LeBlanc has Massachusetts plates on her Florida car, even though she's clear with her insurer that the car never leaves Florida.

By the way, if you have a primary residence in Massachusetts and your Massachusetts insurer covers your car if it stays all year in Florida, you still can take advantage of most Massachusetts insurance discounts. That same holds true if you live in Illinois but keep a car all year at your vacation getaway in Wisconsin.

However, if your car is registered in one state but keep getting into accidents in another state, an insurer may start questioning your residency. In that situation, consider whether you even need to file a claim, Carrasquillo says. If you get into an accident that causes $800 worth of damage and you have a $500 deductible, it may not be worth the hassle to gain the $300 difference.

In the end, insurance professionals say, simply be honest with your insurer about where each car you own spends most of its time. After all, Carrasquillo says, "insurance companies aren't stupid."

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