Backdating auto insurance

Companies purchase liability insurance coverage to protect themselves from risks that may arise in the future.

In some cases, however, there may be gaps in coverage that are only discovered after a loss event occurs.

"Insurance companies are seeing some of the problems they're encountering and they're throwing in different exclusions as to who can drive the car, trying to control the unusual cases," says Glenn Tippy, president of the Professional Insurance Agents of New Jersey.

Of course, if you’re caught driving with a suspended license, you’ve made things that much worse for yourself.

The answer is maybe not today, maybe not tomorrow, but soon -- and at least until you can show you're getting your license back.

If you lose your driver's license, do you lose your car insurance, too?

And to make it more befuddling, insurance companies each have their own definitions of those terms in their policies which they are supposed to follow.

The three terms are issue date, policy date and effective date.

This protects the insurer from unlimited losses in the case that a claim becomes more expensive than estimated.

The insurer will still seek to reduce the claim amount as much as possible, as the less it is forced to pay out the more it keeps in profit.

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