What Is Stacked Insurance in Pennsylvania?

Auto insurance policies include various types of coverage, each with specific limits on the amount an insurer will pay for covered damages. These limits define the maximum financial responsibility for the insurance company in the event of a claim. Understanding how these limits function is important for policyholders. One method to potentially increase available coverage involves stacked insurance.

Defining Stacked Insurance

Stacked insurance allows policyholders to combine the coverage limits of certain auto insurance types, typically Uninsured Motorist (UM) and Underinsured Motorist (UIM) coverages. Its purpose is to increase the total amount of coverage an individual can claim following an accident where the at-fault driver has insufficient or no insurance. For instance, if a policy covers multiple vehicles, each with its own UM/UIM limit, stacking permits those individual limits to be added together.

This combining of limits can significantly enhance the financial protection available for medical bills, lost wages, and other damages. Without stacking, a policyholder would be limited to the coverage amount assigned to the specific vehicle involved in the accident. Stacked coverage offers a way to access a higher payout potential, which can be particularly beneficial in severe accidents where damages exceed standard coverage amounts.

Types of Stacking in Pennsylvania

Pennsylvania law provides specific frameworks for how stacking applies to auto insurance policies. Two primary forms exist within the state: “intra-policy” stacking and “inter-policy” stacking. Intra-policy stacking involves combining the Uninsured Motorist (UM) and Underinsured Motorist (UIM) limits for multiple vehicles insured under a single auto insurance policy. For example, if a single policy covers two cars, each with $50,000 in UM/UIM coverage, intra-policy stacking would make $100,000 available.

Inter-policy stacking, conversely, allows for the combination of UM/UIM limits from multiple separate policies owned by the same individual or household. Uninsured Motorist (UM) coverage in Pennsylvania provides protection when the at-fault driver has no insurance. Underinsured Motorist (UIM) coverage steps in when the at-fault driver’s insurance limits are not enough to cover the full damages incurred. Pennsylvania law generally makes stacked UM/UIM coverage the default unless it is explicitly waived.

Electing or Rejecting Stacking in Pennsylvania

In Pennsylvania, policyholders have the choice to either elect or reject stacked Uninsured Motorist (UM) and Underinsured Motorist (UIM) coverage. Insurance companies are required to offer stacking to consumers. To reject stacked coverage, a specific written waiver form must be signed by the first named insured.

Choosing stacked coverage typically results in a higher insurance premium compared to rejecting it. The increased cost reflects the enhanced financial protection and higher potential payout available to the policyholder. Waiving stacking may lead to lower premiums, but it limits the total coverage available in the event of an accident with an uninsured or underinsured driver. Policyholders should consider their individual circumstances and financial exposure when making this decision.