Do I Need Stacked Uninsured Motorist Coverage?

Uninsured motorist (UM) coverage serves as a protection within an auto insurance policy. This coverage is designed to shield individuals from the financial repercussions of an accident caused by a driver who lacks adequate insurance. The concept of “stacked” UM coverage offers an enhanced layer of this protection.

Understanding Uninsured and Underinsured Motorist Coverage

Uninsured Motorist (UM) coverage provides financial protection if an at-fault driver has no auto insurance. This coverage typically addresses medical expenses, lost wages, and pain and suffering for the policyholder and their passengers.

Underinsured Motorist (UIM) coverage complements UM coverage by protecting individuals when an at-fault driver has some insurance, but their policy limits are insufficient to cover all damages. UIM coverage generally becomes accessible once the at-fault driver’s liability insurance limits are exhausted.

These coverages primarily focus on bodily injury, providing funds for medical bills, rehabilitation, and income loss. While auto insurance is generally mandatory, nearly 13% of drivers nationwide may operate without insurance, highlighting the importance of UM/UIM protection.

How Stacked Coverage Differs

Stacked uninsured and underinsured motorist (UM/UIM) coverage allows policyholders to combine the coverage limits from multiple vehicles, potentially increasing the total amount available for a claim. This differs significantly from non-stacked coverage, where the policyholder is limited to the UM/UIM limits of a single vehicle, regardless of how many vehicles are on their policy.

There are two primary types of stacking: intra-policy and inter-policy. Intra-policy stacking, sometimes called vertical stacking, occurs when a policyholder combines UM/UIM limits for multiple vehicles insured under the same single policy. For example, if a policy has two cars, each with $50,000 in UM coverage, stacking could provide $100,000 in total coverage.

Inter-policy stacking, also known as horizontal stacking, allows policyholders to combine UM/UIM limits from multiple separate policies they hold or policies on which they are listed. For instance, if an individual is listed on two separate policies, each with $50,000 UM coverage, inter-policy stacking could result in $100,000 in available coverage.

Stacking is not uniformly available across all regions, and state laws dictate its permissibility. Even in states where stacking is allowed, individual insurance carriers may have anti-stacking provisions or may not offer stacked policies. Stacked coverage typically applies only to the bodily injury portion of UM/UIM coverage, not property damage.

Factors to Consider for Stacked Coverage

Higher coverage limits from stacking can offer enhanced protection for personal assets in cases of severe injuries or extensive damages caused by an uninsured or underinsured driver. This is particularly relevant given that the economic cost of a disabling injury from a car accident can exceed $150,000, and comprehensive costs can exceed $1 million when factoring in lost quality of life.

Serious accidents can lead to substantial medical bills, prolonged rehabilitation, and significant lost wages. Stacked coverage provides access to greater financial resources to cover these potential expenses. For example, medical expenses alone for moderate injuries can range from $10,000 to $50,000, while severe injuries can cost hundreds of thousands or even millions of dollars.

Driving habits and exposure also play a role in this consideration. Individuals who commute long distances, drive frequently, or navigate high-traffic areas may face a higher risk of accidents. For these drivers, the increased exposure to uninsured or underinsured motorists makes higher coverage limits from stacking a more compelling option.

While stacked coverage typically entails a higher premium compared to non-stacked options, it can be viewed as an investment in greater financial security. The additional cost should be weighed against the potential for significant out-of-pocket expenses if an accident with an inadequately insured driver occurs. For those with multiple vehicles, stacking can significantly multiply available coverage, making it a more attractive option.

Policyholders should also confirm the availability of stacking in their jurisdiction, as state laws vary on whether intra-policy or inter-policy stacking is permitted. Consulting with an insurance professional can help clarify local regulations and assess whether stacked coverage aligns with individual needs and financial planning.

Applying Stacked Coverage in a Claim

When an accident occurs involving an uninsured or underinsured at-fault driver, and the policyholder has stacked UM/UIM coverage, these limits provide greater financial recourse. Initially, the at-fault driver’s limited liability coverage would be exhausted, or if uninsured, there would be no third-party coverage to access. At this point, the policyholder’s own UM/UIM coverage becomes active.

With stacked coverage, the combined limits from all eligible vehicles or policies are made available to cover the policyholder’s damages. For example, if a policyholder has two vehicles, each with $100,000 in UM bodily injury coverage, and their policy allows stacking, they could access up to $200,000 to cover their injuries. This is a substantial increase compared to the $100,000 limit available with non-stacked coverage.

The purpose of this increased access is to cover the policyholder’s own medical expenses, lost wages, and pain and suffering that exceed other available coverages. This mechanism provides a safety net, protecting individuals from bearing the full financial burden of severe injuries caused by drivers with insufficient or no insurance. Stacked coverage aims to make the injured party whole to the extent of their combined policy limits.