What Is Stacked Insurance in Florida?

Insurance policies are designed to offer financial protection against various unforeseen events, typically up to a predefined limit or maximum amount. These policy limits represent the maximum payout an insurer will provide for a covered loss, regardless of the actual damages incurred. This article will explain the concept of insurance stacking, specifically how it applies within Florida.

Defining Insurance Stacking

Insurance stacking refers to the practice of combining the coverage limits from multiple insurance policies or from multiple vehicles listed on a single policy to increase the total amount of available coverage for a single incident. This mechanism allows an individual to potentially access higher levels of financial protection than what a single policy or vehicle’s coverage limit might provide on its own. For instance, if an individual has two vehicles, each insured with a $25,000 liability limit, stacking could allow them to combine these limits, effectively creating a $50,000 pool of coverage for a single claim. The core idea is to aggregate the protective capacity of different coverage units into a larger sum. This concept is distinct from simply having multiple policies, as stacking specifically enables the aggregation of their individual limits for a single claim.

Florida’s Stacking Provisions

In Florida, insurance stacking primarily applies to Uninsured/Underinsured Motorist (UM/UIM) coverage, which provides protection when the at-fault driver has insufficient or no liability insurance to cover your damages. UM/UIM coverage is designed to cover medical expenses, lost wages, and pain and suffering if you are injured by such a driver. Florida law allows for two main types of stacking in this context: intra-policy stacking and inter-policy stacking.

Intra-policy stacking occurs when a policyholder has multiple vehicles listed on a single insurance policy and chooses to combine the UM/UIM limits for each vehicle. For example, if you have one policy covering two cars, and each car has $25,000 in UM/UIM coverage, intra-policy stacking would allow you to access $50,000 in coverage for a single incident involving any of those vehicles.

Inter-policy stacking, conversely, allows a policyholder to combine UM/UIM coverage limits from separate insurance policies they hold, or from policies held by resident relatives within the same household. For instance, if you have a personal policy with $25,000 UM/UIM and a family member living with you has a separate policy with $25,000 UM/UIM, inter-policy stacking could allow you to access a combined $50,000 in coverage for a single covered event. Both intra-policy and inter-policy stacking require specific elections or non-elections from the policyholder.

Managing Your Stacking Options

Policyholders in Florida have the ability to choose whether to stack their Uninsured/Underinsured Motorist (UM/UIM) coverage or to unstack it. This decision is typically made when purchasing a new auto insurance policy or during the renewal process. Insurers are required to offer both stacked and unstacked UM/UIM options, and policyholders must either select stacking or formally reject it in writing.

Opting for stacked coverage generally results in a higher insurance premium compared to unstacked coverage. Conversely, choosing unstacked UM/UIM coverage will typically lead to lower premiums because the insurer’s exposure is limited to the coverage amount of a single vehicle per incident. Policyholders should discuss these options thoroughly with their insurance agent or directly with their insurer to understand the implications for their specific situation.