The ability to make a vehicle insurance policy effective from a date in the past is a complex issue. Generally, insurers do not allow policies to become active retroactively. For instance, if an incident occurred on October 20th, an individual cannot typically purchase coverage on October 22nd and have it apply to the previous event.
This practice is avoided primarily due to the potential for fraud. Retroactive application of coverage would create a situation where individuals could obtain insurance only after an incident, effectively shifting the financial burden of the loss onto the insurance company without having paid premiums for the period during which the risk existed. Historically, insurance models rely on predicting and distributing risk across a pool of policyholders before losses occur; backdating fundamentally undermines this principle.
