What Is Stacking in Auto Insurance?

Auto insurance policies can offer a feature known as stacking, which allows policyholders to combine certain coverage limits to increase their financial protection. This concept applies specifically to uninsured motorist (UM) and underinsured motorist (UIM) bodily injury coverage. Stacking provides a way to access higher payouts if you are involved in an accident with a driver who has insufficient or no insurance, offering a more substantial safety net for medical expenses and other related costs.

Understanding Intra-Policy Stacking

Intra-policy stacking occurs when a single auto insurance policy covers multiple vehicles, and the policyholder chooses to combine the Uninsured/Underinsured Motorist (UM/UIM) bodily injury limits for each vehicle listed on that policy. This practice is sometimes referred to as horizontal stacking.

For example, if a policy covers two vehicles, and each has a UM/UIM bodily injury limit of $25,000 per person, stacking these limits would result in a combined coverage of $50,000 per person available for a single accident. This increased limit offers greater financial protection against uninsured or underinsured drivers.

Understanding Inter-Policy Stacking

Inter-policy stacking involves combining UM/UIM bodily injury limits from multiple separate auto insurance policies. This often applies when an individual or family has several distinct policies, such as one for a personally owned vehicle and another for a family member’s car under a separate policy, where the policyholder is also a named insured. This form of stacking is sometimes known as vertical stacking.

Consider a scenario where an individual has their own policy with a $35,000 uninsured motorist bodily injury limit, and their name is also on another family member’s policy with a $25,000 uninsured motorist bodily injury limit. By inter-policy stacking, these limits could be combined, potentially providing a total of $60,000 in coverage.

State Regulations on Stacking

State laws play a significant role in determining whether stacking is permitted, required, or prohibited in auto insurance policies. As of recent information, approximately 32 states allow some form of insurance stacking. However, the specifics of how stacking is implemented can vary considerably by state. Some states may mandate that insurers offer stacking, while others allow policyholders to choose whether to “opt-in” or “opt-out” of this coverage.

For instance, in states like Pennsylvania and Florida, policyholders might have the option to waive stacking when purchasing their policy. In contrast, certain states, such as California, prohibit stacking entirely, limiting policyholders to the coverage limits of the policy for the vehicle involved in an accident. Even in states where stacking is allowed, individual insurance companies might not offer the option or may include anti-stacking language in their policies. Policyholders should review their specific state’s regulations and their policy language to understand their stacking options.

Making an Informed Decision

Deciding whether to stack auto insurance coverage involves weighing several factors, assuming it is an available option in your state. A primary consideration is the balance between increased coverage and the potential for higher premiums. Stacking typically comes with an additional cost, as it significantly increases the maximum payout an insurer might be responsible for. Policyholders should compare the benefit of potentially higher payouts against this extra premium expense.

An individual’s personal risk assessment should also guide this decision. This includes evaluating one’s driving habits, the frequency of driving in areas with a higher prevalence of uninsured or underinsured motorists, and personal financial circumstances. For example, states with a notable percentage of uninsured drivers might make stacked coverage a more compelling option. Consulting with a qualified insurance agent is advisable to understand how stacking applies to a specific policy and to navigate state-specific regulations.