Stacked Versus Unstacked Insurance

What’s the difference between stacked and unstacked insurance?

A good understanding of stacked vs. unstacked auto insurance can help you choose a policy that provides the right type and level of protection in the event of a car accident. Most car insurance policies are unstacked, but stacked coverage may be worth considering if you have more than one vehicle.

Stacked car insurance allows you to combine policy limits for multiple vehicles into one higher limit, giving you greater protection against accident-related losses. It can be helpful if an uninsured or underinsured motorist hits your vehicle.

However, the option to stack your car insurance is not available in every state. In this article, we’ll provide useful information about stacked and unstacked insurance, including what they mean, how they differ, and which one you should choose.

What Is Stacked Car Insurance?

If you live in a state that allows you to stack your auto insurance, you can add the policy limits for different vehicles together to increase your overall coverage limit. To do this, you must be a named driver on each of the policies. While it gives you added protection, a stacked policy comes at an extra cost.

Car insurance stacking is only applicable to uninsured motorist (UM) and underinsured motorist (UIM) coverage. This type of coverage lets you claim compensation for losses resulting from a motor vehicle accident with an underinsured or uninsured at-fault driver.

UM and UIM coverage comes in two forms: bodily injury and property damage. Bodily injury coverage pays for the medical expenses and related costs of treating the injuries that you and your passengers sustain during an automobile accident. UM/UIM may also pay for damages such as lost wages and future medical bills. Property damage, on the other hand, covers the cost of repairs to your vehicle.

You can only stack your UM and UIM bodily injury coverage limits. You can’t combine the property damage limits for different cars. By default, your UM and UIM limits match the coverage limits you have for bodily injury liability on your policy. This means that you won’t be able to increase your UM and UIM limit unless you also increase your bodily injury liability limit.

How To Stack Your Car Insurance Coverage

If you decide to stack your auto insurance coverage, you can do it vertically or horizontally.

Vertical Stacking

Vertical stacking involves combining multiple coverage limits from one insurance policy to get a higher UM and UIM limit. You can do this if you have at least two vehicles on the same policy. In vertical stacking, you multiply your UM and UIM bodily injury limits by the number of vehicles on your policy. This is the best way to determine the new coverage limit on your stacked insurance policy.

For example, suppose your car insurance policy has a $25,000 limit for UM and UIM coverage. If you’re insuring two vehicles on your policy and want better protection on the road, you can stack your available UM and UIM bodily injury policy limits to raise your coverage to $50,000 per accident. If you have three cars on your policy, the total amount of coverage per accident will be $75,000.

Horizontal Stacking

In some states, you can stack UM and UIM coverage for multiple vehicles in the same household if your name is listed on each of the policies. This is called horizontal stacking.

For example, if you have separate insurance policies for your vehicle and your spouse’s vehicle, you may be able to combine the coverage limits on the two policies if you are in an accident with an underinsured or uninsured driver. This is possible even if you aren’t the main policyholder for one of the policies.

Let’s say you have $25,000 of UM and UIM coverage on your car insurance policy, and one of your family members has a policy that offers the same type and level of protection.

With horizontal stacking, you may be reimbursed for medical bills totaling up to $50,000 following a collision with an uninsured or underinsured driver.

What Is Unstacked Car Insurance?

As the opposite of stacked auto insurance, unstacked car insurance comes with UM and UIM coverage limits that aren’t combined. The limits remain separate even if you insure more than one vehicle or live in the same household as another insured driver.

In this case, you’ll only be entitled to compensation up to the UM and UIM limits specified on the declarations page of your car insurance policy.

In most cases, car insurance policies that have UM and UIM coverage are unstacked by default. The main advantage of an unstacked policy over a stacked one is that it can reduce your premium.

However, due to the lower bodily injury coverage limits, you may have to cover your medical costs out of your own pocket if you are injured in a car accident with an uninsured at-fault driver.

Which States Allow Auto Insurance Stacking?

State laws vary regarding auto insurance stacking. Some states don’t permit drivers to stack their car insurance, while others may allow multiple-policy stacking only or both single- and multiple-policy stacking. According to FinanceBuzz, the following is a list of states where you can stack coverage.

States that permit both vertical and horizontal stacking:

  • Alabama.
  • Arkansas.
  • Colorado.
  • Florida.
  • Hawaii.
  • Indiana.
  • Kentucky.
  • Mississippi.
  • Missouri.
  • Montana.
  • Nevada.
  • New Hampshire.
  • New Mexico.
  • Ohio.
  • Pennsylvania.
  • Rhode Island.
  • South Carolina.
  • Vermont.
  • Virginia.
  • West Virginia.
  • Wisconsin.
  • Wyoming.

States that allow only horizontal stacking:

  • Delaware.
  • Georgia.
  • New Jersey.
  • New York.
  • North Carolina.
  • Oklahoma.
  • Oregon.
  • Tennessee.
  • Texas.
  • Utah.

If you reside in a state with a high number of uninsured drivers, it may be a good idea to stack your UM and UIM coverage limits, if possible. This is especially important if you or your frequent passengers don’t have a health insurance policy. You may want to get a quote from an insurance company to see if you can afford a stacked policy.

Stacked vs. Unstacked Insurance: Which Should You Choose?

Some people think that stacked auto insurance is worth it because it offers more financial protection in the event of an accident. Others may prefer to purchase an unstacked policy to keep their premium low.

If you have any questions about car insurance stacking, consider speaking with your insurance agent. Below are a few questions that you can ask yourself to make an informed decision:

Do You Have a Health Insurance Policy That You’re Comfortable Using?

Typically, your health insurance provides coverage for medical expenses resulting from a car accident after you use the UM and UIM coverage from your auto insurance policy.

However, if your health insurance plan has a high deductible, you may save money by purchasing stacked coverage instead.

Does Stacking Your Car Insurance Dramatically Increase Your Premium?

A stacked insurance policy may increase your premium by a little or a lot, depending on the number of insured vehicles, your driving record, your insurer, and other factors. Again, it’s a good idea to consult with your insurance agent to find out how much it will cost you to stack your coverage.

Do You Regularly Drive around with Passengers in Your Vehicle?

UM and UIM coverage also offers compensation for your passengers’ medical expenses if they suffer injuries in a car accident with an underinsured or uninsured motorist.

If you frequently have passengers in your vehicle, getting stacked coverage is a good way to help them avoid having to use their own insurance in the event of an accident.

Does Your Car Insurance Policy Have Medical Payments Coverage or Personal Injury Protection?

While a bodily injury liability policy will pay for the medical care of other drivers and passengers if you are at fault in a crash, medical payments coverage or personal injury protection (PIP) pays out first for your own medical expenses following an accident.

Other coverages on your policy, including UM and UIM coverage, take effect after you’ve used up your primary coverage. So, if you have a high medical payments coverage or PIP limit, it may be less necessary to stack your insurance.

Are There Many Uninsured Motorists in Your Area?

A stacked insurance policy only protects you against losses due to an accident with an underinsured or uninsured driver. With that in mind, you can assess your need for stacked coverage by finding out the percentage of uninsured motorists in your area.

In 2021, the Insurance Research Council estimated that about 12.6% of American drivers were uninsured. States with the highest percentages of uninsured motorists include Mississippi, Michigan, Tennessee, New Mexico, Washington, Florida, Arkansas, Alabama, and California.

Frequently Asked Questions about Stacked vs. Unstacked Insurance

Do I Need Stacked Auto Insurance?

Legally, you aren’t required to stack your auto insurance. Stacking may be a common practice in some states, but you can easily opt out of it. In some states, the only car insurance requirement you need to meet is a certain minimum amount of liability insurance.

As mentioned earlier, stacked insurance only applies to UM and UIM bodily injury coverage, which isn’t mandatory in many states. Basically, the reason to get a stacked policy is to ensure you’ll have better financial protection in an accident with a motorist who is uninsured or doesn’t have enough coverage to pay for your losses in full.

How Much Does It Cost to Stack Car Insurance?

The cost of auto insurance varies depending on a wide range of factors, and it can increase a little or a lot with stacked coverage. Ideally, you should try to balance the coverage limits you need with a premium that fits your budget.

The first step to determining the cost of a stacked policy is to request a quote from your insurance agent. If you aren’t satisfied with the quote, you can shop around to find better offers.

Can I Stack Other Types of Auto Insurance Coverage?

UM and UIM coverage is the only car insurance coverage you can stack. If you feel that you need higher limits on other types of coverage, check with your insurance company to find out how much the additional protection will cost you. Alternatively, you can raise your coverage limits online or through your agent’s app to see the price difference in real time.

What Does It Mean to Reject Stacked Car Insurance?

In some states, car insurance policyholders are required to reject UM and UIM coverage either in writing or by submitting an electronic rejection form.

For insurance companies that offer stacked policies, this rejection form also enables you to accept UM and UIM coverage but forgo stacking to save on your premium.

Where Can I Purchase a Stacked Insurance Policy?

Not every insurance company allows you to stack car insurance. Even in states where stacking is permitted, insurers can choose not to offer it as long as they explain their policy to their customers.

If your insurance provider does allow you to stack your UM and UIM insurance, they may cap the coverage limits.

A stacked insurance policy is a great way to enhance your financial protection on the road. Whether vertical or horizontal, it can give you a higher payout if you happen to get into an accident with an underinsured or uninsured at-fault driver.

However, it will raise the overall cost of your car insurance, so you should consider your budget and coverage needs before you make a final decision. If you decide to stack your policy limits, make sure you compare quotes from different insurance companies to find the best deal.

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