What Is Stacked Auto Insurance and How Does It Work?

Auto insurance provides financial protection against physical damage or bodily injury from traffic collisions. Stacked auto insurance offers policyholders a method to increase their available coverage limits, providing additional financial security in specific accident scenarios.

Understanding Stacked Auto Insurance

Stacked auto insurance allows policyholders to combine coverage limits from multiple vehicles or policies, increasing the total available coverage for a claim. This primarily applies to Uninsured/Underinsured Motorist (UM/UIM) bodily injury coverage. UM coverage pays for expenses if hit by an uninsured driver, while UIM coverage assists when the at-fault driver’s insurance is insufficient. Opting for stacked coverage can significantly increase financial protection for medical expenses and related costs for you and your passengers, especially when injuries are severe and exceed standard policy limits.

Distinguishing Intrapolicy and Interpolicy Stacking

There are two main types of stacking: intrapolicy and interpolicy.

Intrapolicy stacking, also known as vertical stacking, combines UM/UIM limits for multiple vehicles under a single auto insurance policy. For instance, if a policy covers two vehicles, each with $50,000 in UM/UIM bodily injury coverage, intrapolicy stacking allows a combined limit of $100,000 for a single accident. This multiplies the coverage limit by the number of vehicles on that policy.

Interpolicy stacking, also known as horizontal stacking, combines UM/UIM limits from separate auto insurance policies. This applies when a household has multiple policies covering different vehicles. For example, if one vehicle has $50,000 in UM/UIM coverage and another household member has a separate policy with the same coverage, interpolicy stacking could result in $100,000 total. State laws dictate the availability of both intrapolicy and interpolicy stacking.

Impact on Coverage Limits

Stacked auto insurance increases total available coverage limits by multiplying them. When applied, UM/UIM bodily injury limits increase based on the number of insured vehicles or relevant policies. This means the maximum amount an insurer will pay for a covered claim can be substantially higher.

For example, a policy with UM/UIM bodily injury limits of $100,000 per person and $300,000 per accident covering three vehicles would increase to $300,000 per person and $900,000 per accident if stacked. This higher coverage provides more comprehensive financial protection for severe accidents involving uninsured or underinsured drivers. It helps ensure substantial medical bills, lost wages, and other related costs are more fully compensated, reducing out-of-pocket expenses.

Key Factors Influencing the Decision to Stack

Several factors warrant careful evaluation when considering stacked auto insurance. State laws are central, dictating whether stacking is allowed, required, or must be explicitly rejected. Some states may prohibit stacking entirely, while others only allow specific types; check local regulations.

Stacked coverage typically comes with an increased premium. This additional expense should be weighed against the potential for higher coverage. The number of vehicles owned by an individual or household influences stacking potential, as more vehicles generally allow for a greater increase in combined limits. The decision should align with an individual’s overall financial protection strategy, considering existing health or disability coverage that may also provide benefits following an accident.