Stacked and Unstacked Insurance

While almost every state requires drivers to have car insurance, not everyone follows this rule. For this reason, it's smart to protect yourself against this risk with uninsured/underinsured motorist protection (UM/UIM).

With this type of coverage, your insurance company covers expenses following an accident where the other driver is at fault and doesn't have enough coverage to pay for the damages they incur. When you insure multiple vehicles AND increase their UI/UIM coverage by combining their coverage limits, you're stacking your auto insurance coverage. Read on for more.

What Is Uninsured/Underinsured Coverage?

If you're in an automobile accident with an uninsured driver and don't have UM/UIM coverage, you may have to pay out-of-pocket for damages and injuries, even if you're not at fault. Fortunately, most car insurance providers offer uninsured/underinsured coverage at an affordable rate. Uninsured motorist insurance goes into effect under any of the following conditions:

  • The at-fault driver does not have auto insurance.
  • The at-fault driver's insurance is insufficient to cover expenses.
    • In this situation, the other driver's auto insurance company would pay up to their policy's limit, and then your insurance provider would cover the remainder up to your policy limit.
  • You are the victim of a hit-and-run.

Note that UM/UIM coverage is usually just for bodily injury, so check with your provider to confirm your policy's details.

Stacking Your Auto Insurance Coverage

When you stack your coverage, it means that you increase the amount of UM/UIM coverage for multiple insured vehicles. Auto insurance companies may allow you to stack insurance within a single policy OR across different ones.

For example, if you have two vehicles on a single policy with UM coverage for $40,000, stacking coverage increases your UM coverage limit per vehicle to $80,000. When it comes to separate policies, you might have UM coverage for three vehicles on three separate policies; let's say each car's limit is $30,000. By stacking your coverage, you can increase your original UM coverage limit from $30,000 to $90,000 for one of the vehicles within their respective policy.

By choosing to stack your UM/UIM coverage, you'll have more protection following an accident with a driver who failed to obtain the proper amount of auto insurance. In addition, some states don't permit drivers to get UM/UIM coverage limits totaling more than their liability insurance UNLESS the coverage is stacked.

The only downside to stacked coverage is paying a higher premium. Insurance companies charge more for drivers who select stacked coverage to offset the risk of reimbursing them for more following an accident. Your increased monthly rate could really pay off in the long run though.

Can You Stack Your Coverage?

If you're only insuring one vehicle, your auto insurance company will only offer unstacked coverage. Unstacked UM/UIM coverage means the amount of protection you have is equal to your policy's limit. If your insurance company sets your coverage limit at $25,000, this is the maximum amount of protection you have following an accident.

However, if you have coverage for two or more cars and your state permits insurance stacking, you can increase the amount of uninsured/underinsured coverage you have. Keep in mind that some states do not allow stacking in any form. In addition, the states that permit it may have stipulations regarding its use. To find out if stacked insurance is allowed in your state, contact your auto insurance provider. Even if you live in a state that permits it, your insurance company may not offer the option.

If your state and insurance company permit stacked coverage, consider enhancing your policy with it. Not only will you receive additional compensation following an accident with an uninsured or underinsured driver, but you will also have the peace of mind this kind of protection provides.