When is a car insurance letter necessary?

A car insurance letter is necessary if there is a discrepancy on your driving record, when you are switching companies, and when you move to another state.

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Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Jo...

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Reviewed by Joel Ohman
Founder & CFP®

UPDATED: May 23, 2020

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Here's what you need to know...

  • If you have recently moved to another state or you have been previously insured under a company car insurance policy, you may need to provide a car insurance letter before you can take out a new policy
  • Another situation where you may be asked for this information is when there is a discrepancy between the driving history you provide to the insurance company and what is recorded on your driving record
  • If you are moving to a new state, you will need to arrange car insurance coverage shortly after you arrive
  • Your current policy will only cover you for a short time once arrive at your new home, which means getting a new car policy in place quickly is a priority

There are a few different scenarios which may require you to provide a car insurance letter.

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Car Insurance Letter for Moving To Another State

Before you move, ask your current provider for a car insurance letter.

It serves as a letter of introduction to your new insurance company that sets out information like how long you were insured by the company and if you made any claims against your policy.

If you did make a claim, the letter will provide details of the claim and the amount the insurance company paid out.

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Car Insurance Letter for Previous Coverage under a Company Car Policy

In a case where you had insurance coverage under a company car insurance policy, this information may not appear on a driving record search.

When you want to arrange for coverage under your own name, producing a car insurance letter will confirm the fact that you had previously been insured.

If it appears that you had a lapse in your car coverage, you will be considered a high-risk driver to an insurance company.

Being able to produce prove that you have been continuously insured means that the company’s underwriters are in a better position to evaluate your application and provide you with a quote that is appropriate to your driving history.

Car Insurance Letter for Discrepancy in Driving Record

Another situation where you may be asked to produce a car insurance letter is when there is a discrepancy between the information that you provide about your insurance history when you apply for insurance coverage and what appears on your official driving record.

If you are asked to produce an insurance letter, it doesn’t mean that the insurance company is accusing you of lying on your application.

Insurance companies do make mistakes when they update their clients’ records. It’s possible that the information that the company you have applied for coverage with had detected an error, and the insurance letter can help to correct it.

If you are asked to provide a car insurance letter, ask your current car insurance company to provide you with one. It must:

  • Be written on official letterhead
  • State your policy number
  • State the date the policy took effect and expired
  • Include the names of all drivers listed on the policy
  • List any claims that you made

Car Insurance Letter for Applying for a New Policy

A letter may be required when you are applying for a new car insurance policy. Before you make a decision about which company to buy your new coverage from, take some time to consider your options by getting quotes from several companies.

Each one uses a specific formula to evaluate an applicant’s level of risk and set rates, which is why the price you will pay for the same amount of protection can vary significantly between providers.

To find affordable car insurance coverage, go online to check out several different providers.

Find out how long the company has been in business and check them out with insurance ratings agencies such as A.M. Best to make sure they are financially stable before you decide to buy a policy.

You will also want to find a company that treats its customers well, which means being able to report a claim quickly and get it resolved in a timely manner.

If you are moving to a different state or need to arrange individual coverage after you have been insured under a company car policy, you should ask your current provider for a car insurance letter.

You may be asked to provide one if there are any concerns that arise when you apply for a new policy, and your current insurance company will be able to provide you with one on request.

It’s an important document that will make getting the coverage you need a much easier process.

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