Stacking Insurance: Stacked vs. Unstacked Insurance Coverage

June 1, 2016

An guide to the advantages of stacked insurance, and a comparison of stacked vs unstacked insurance.

Stacked Vs Unstacked

Before comparing stacked vs unstacked insurance coverage, it helps to clarify the terms. Stacked insurance is one method to increase the coverage for injuries caused by an underinsured or uninsured motorist. Approximately 20 states allow the stacking of car insurance coverage, so if you want to exercise this option, then you need to check if your state allows it and if there are any limits in coverage that may arise as a result.

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Stacked coverage can only apply if there is more than one car covered. By stacking insurance, you can take advantage of increased underinsured and uninsured motorist bodily injury coverage for all cars under your policy.

What Is Auto Insurance Stacking?
Auto insurance stacking is the combining of coverage for underinsured and uninsured motorist bodily injury if you have multiple cars. By combining coverage, you are able to substantially increase your insurance company’s payment limits should you be involved in an accident with an uninsured motorist. For example, if you had $50,000/$100,000 coverage and decided to exercise the stacking option for a second car, stacked coverage for both cars would be $100,000/$200,000 (existing coverage times two cars). With three cars, the coverage would increase to $150,000/$250,000 and so forth for additional vehicles.

Unstacked Insurance
With multiple cars on a policy, you do not have to stack the coverage. As in the above example, each car would be covered at $50,000/$100,000 individually. No matter how many cars you have on the policy, the amount of coverage for each one stays the same. The benefit to this is that it will save you money on premiums as stacking carries a heavier fee. However, if you were to try to increase the coverage level of each car to the amount the stacked coverage would be, you'd find it more expensive and more complicated than stacking.

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When Is Stacking Allowed?
Stacking insurance coverage only applies to the uninsured and underinsured motorist bodily injury coverage on your auto policy.

Additionally, stacked coverage is not allowed in every state. If it is available, your insurance company will require you to specifically request it as part of your coverage. Most people find out about stacking when their auto insurance agent asks them to check the box requesting stacking as they review the application.

Advantages of Stacking Auto Insurance
The primary benefit to stacking auto insurance is that if you have multiple cars, it allows you to substantially increase your policy payment limits for uninsured and underinsured bodily injury. As you add coverage for two or three or more cars, those policy benefits can become significant.

If you are involved in a serious accident with an underinsured or uninsured motorist, these additional policy limits can increase your ability to cover any damages or medical expenses related to the accident for yourself or passengers. If the person responsible for the accident does not have enough coverage, having stacked coverage can help close the gap between their coverage and the coverage you have available with your own policy.

Disadvantages of Stacking Auto Insurance
While stacking auto insurance benefits for uninsured and underinsured bodily injury can result in substantial benefits for consumers, stacking does pose a danger for the auto insurance industry as a whole.

When uninsured and underinsured bodily injury coverage was first proposed, the industry did not anticipate the ability to stack coverage for several cars into combined higher coverage limits. As more and more states have come to allow stacking, payouts for claims have the potential to be much higher than originally intended. As a result, there is the potential danger that insurance companies will attempt to recoup their losses by raising premiums for stacked coverage high enough to outweigh the benefit for consumers.

One of the arguments that the insurance industry makes against stacking is that coverage limits are too high and result in loss of profits for them. Unfortunately, if this is the case, then the danger may indeed be that stacking will result in higher uninsured and underinsured bodily injury premiums for everyone. Alternatively, there may be a push to eliminate this type of optional coverage altogether, especially since all states, except New Hampshire, now have mandatory insurance coverage requirements.