The action of making a car insurance policy effective from a date earlier than the actual purchase date is generally prohibited. For example, attempting to obtain coverage retroactively following an accident is illegal and considered insurance fraud.
The prohibition against retroactive policy commencement safeguards the financial stability of insurance companies and ensures fairness among all policyholders. Allowing the practice could lead to widespread abuse, potentially destabilizing the insurance market and increasing premiums for everyone. Regulations and contractual agreements are structured to prevent this type of situation.
