Do I Need Stacked Insurance If I Only Have One Car?

When navigating car insurance, many encounter terms like uninsured and underinsured motorist coverage and questions about “stacking.” This concept determines the financial protection available after an accident. Understanding whether stacked insurance is relevant or beneficial, particularly for those with only one vehicle, can help clarify coverage needs. This article demystifies these insurance components and their application to a single car.

Understanding Uninsured and Underinsured Motorist Coverage

Uninsured Motorist (UM) and Underinsured Motorist (UIM) coverages are components of an auto insurance policy designed to protect you and your passengers. UM coverage activates when the at-fault driver in an accident has no liability insurance. This is particularly relevant given that, nationally, an estimated 13-14% of drivers operate without insurance. UIM coverage, conversely, provides protection when the at-fault driver has insurance, but their policy limits are insufficient to cover the full extent of your damages, such as medical bills or lost wages.

These coverages protect against financial losses from bodily injuries, including medical expenses, lost wages, and pain and suffering. Some policies may also include property damage coverage for your vehicle. While not universally mandated, UM/UIM coverage is required in many states and is recommended due to the financial risk posed by drivers with inadequate or no insurance. UM/UIM coverage can also extend to incidents involving hit-and-run drivers where the at-fault party cannot be identified.

What Stacked Coverage Is

Stacked coverage increases the available limits of your Uninsured Motorist (UM) and Underinsured Motorist (UIM) coverage. It combines coverage limits from multiple sources to provide a higher total payout in a claim. This option is only applicable to UM/UIM bodily injury coverage, not property damage.

There are two primary ways insurance policies can be stacked. Intra-policy stacking, sometimes called vertical stacking, occurs when you have multiple vehicles listed on a single insurance policy. For instance, if you have two cars on one policy, each with $50,000 in UM/UIM coverage, intra-policy stacking could allow for a combined coverage of $100,000.

The second type is inter-policy stacking, also known as horizontal stacking. This applies when you combine UM/UIM limits from separate insurance policies you or a household member own. For example, if you have two separate policies, each covering one car, inter-policy stacking could allow you to combine their limits.

Stacked Coverage and a Single Vehicle

For individuals with one vehicle, traditional “stacked” insurance, which combines limits from multiple vehicles or policies, does not apply. The core concept of stacking relies on having more than one vehicle or policy to aggregate limits. Therefore, intra-policy or inter-policy stacking are not relevant in a single-car scenario.

However, the protective outcome stacking aims to achieve—higher coverage limits—can still be obtained for a single vehicle. This is accomplished by purchasing higher Uninsured Motorist (UM) and Underinsured Motorist (UIM) limits on your sole insurance policy. Increased UM/UIM limits enhance your financial protection against severe injuries and damages caused by an uninsured or underinsured driver.

For example, instead of the state minimum, you might choose UM/UIM limits of $100,000 per person and $300,000 per accident to cover potential medical expenses, lost wages, and pain and suffering. This provides greater financial security, directly addressing the risks UM/UIM coverage is designed to mitigate.

Making Your Coverage Decision

When determining the appropriate level of Uninsured Motorist (UM) and Underinsured Motorist (UIM) coverage, especially for a single vehicle, several factors warrant consideration. State laws play a significant role, as UM/UIM requirements and stacking options vary across jurisdictions. Some states mandate these coverages, while others make them optional, though insurers are often required to offer them.

The cost of increasing UM/UIM limits is modest compared to the financial protection it offers. For example, increasing coverage from minimums to higher limits, such as $100,000 per person and $300,000 per accident, might only add $10-20 per month to premiums. Considering your personal financial situation is also important; assess whether your existing health insurance, disability coverage, or personal assets would adequately cover extensive medical bills and lost income in a severe accident. UM/UIM can fill gaps that health insurance may not cover, such as lost wages or pain and suffering.

Finally, evaluate the prevalence of uninsured drivers in your area and your personal comfort level with risk. Nationally, about one in eight drivers lacks insurance, but this rate can be much higher in certain states, sometimes exceeding 20-25%. Choosing higher UM/UIM limits provides a robust financial safety net, safeguarding against costs that can arise from accidents involving those without adequate insurance. Matching your UM/UIM limits to your liability coverage limits is a common recommendation to ensure consistent protection.