The Limits That Count Are the Ones on Your Policy the Day of the Crash

The call usually comes the day after: "I want to raise my limits." It is the right instinct and the wrong moment, at least for the crash that prompted it. This page explains why, and why the one way around it is a crime.

Myth and fact

Myth: "If a claim looks big, I can increase my coverage before the other side files."
Fact: The accident date decides which limits apply. A change made afterward takes effect from its own effective date and looks forward, not back.

Why the date controls everything

Insurance Code 381 requires every policy to specify, among other things, the risks insured against and the period during which the insurance is to continue. Your declarations page shows that period and the limits that go with it. When you change limits, the change is recorded with an effective date. A crash is measured against whatever the policy said on the day it happened.

A worked timeline

The same logic runs the other way. If you lower your limits, or drop to the minimum to save money, a crash after that date is measured at the lower figures.

If you had no policy at all on the day

Buying a policy after an accident does not cover that accident. The DMV's handbook says your driving privilege will be suspended for up to four years if you are in a collision without proper insurance, no matter who was at fault, with a route back during the last three years through an SR 22 or SR 1P certificate kept for that period.

The line not to cross

Penal Code 550 makes it unlawful to knowingly present a false or fraudulent claim for payment of a loss under an insurance contract, and to knowingly prepare a writing intended to support one. Telling an insurer that a crash happened after coverage started, or after limits were raised, when it did not, falls squarely on the wrong side of that line. The consequences are criminal, not just a denied claim.

What raising limits after a crash still does

• It protects you from the next accident, which is the reason to do it.
• It costs nothing in honesty: tell your insurer everything about the earlier crash, which is handled under the earlier limits.
• It is a natural moment to look at the whole policy, including uninsured motorist and property damage limits.

The same principle applies if you switch companies after a crash. The claim generally stays with the insurer whose policy covered the accident date, at that policy's limits, even if a new policy with higher limits starts the following week. Keep both policies' declarations pages in your records until the claim is closed.

The only time it works

Before. The best day to read your declarations page and price the next step up is an ordinary one, with no claim in the picture. See higher limits priced here while the decision is still yours to make in advance.