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Stacked insurance: What is it and how does it work?

  • Auto Insurance
  • Renee Martin
  • 5 minutes

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To understand the differences between stacked and unstacked car insurance, we must first understand what they are. Stacked insurance lets you combine policy limits from multiple car insurance policies to help offer greater protection in the event of an accident with an uninsured or underinsured motorist.

How does stacked insurance work?

Stacked insurance primarily deals with uninsured and underinsured motorist coverage. The term “stacking” refers to combining coverage limits for several cars. Coverage limit is the maximum amount your insurance will pay toward a covered claim. 

As a result, merging multiple coverage limits into a single larger limit can provide more protection in the event of a road accident involving an uninsured or underinsured motorist.

In general, stacked insurance works in two ways. However, the availability of either option depends on your state’s laws.

Multiple cars on the same policy: Each car’s uninsured motorist coverage limits can be combined to form a higher composite limit, offering extra coverage. This is commonly referred to as horizontal stacking.

Multiple vehicles with separate policies: If you own two cars or more and are insured under several policies, you may combine the uninsured/underinsured motorist coverage limitations with extra coverage. However, you must note that the policies must be in your name. This method of stacking insurance is commonly called vertical stacking.

stacked insurance

Source: Pixabay

Here’s how stacked insurance works: Assume you were hit by an uninsured driver, resulting in a $25,000 medical bill. You own two vehicles, each with uninsured bodily injury limits of $20,000 apiece. If you don’t have stacked insurance, you’ll be on the hook for $5,000 if the at-fault party can’t or won’t pay.

On the other hand, if your car insurance policy has stacked limits, you could combine the coverage of the two policies and claim up to $50,000. As a result, you would have enough coverage to cover all of your medical expenditures.

Read: Had an accident with an uninsured driver? Now what?

States that allow both kinds of stacked insurance

  • Alabama
  • Arkansas
  • Colorado
  • Florida
  • Hawaii
  • Indiana
  • Kentucky
  • Mississippi
  • Missouri
  • Montana
  • Nevada
  • New Hampshire
  • New Mexico
  • Ohio
  • Pennsylvania
  • Rhode Island
  • South Carolina
  • Vermont
  • Virginia
  • West Virginia
  • Wisconsin
  • Wyoming

States that allow only vertical stacking

  • Delaware
  • Georgia
  • New Jersey
  • New York
  • North Carolina
  • Oklahoma
  • Oregon
  • Tennessee
  • Texas
  • Utah

Read: How to choose the perfect car insurance in 2022

Should I stack my uninsured motorist coverage?

Stacking insurance is a good option if you’re ready to pay a little extra for more coverage. While unstacked insurance may save you some money, stacking insurance costs less than $10 per month on average. In some cases, there may be no cost difference at all. Hence, we’d say stacking insurance has no downsides.

 If you have multiple policies or many vehicles on the same policy, it’s a cost-effective way to increase coverage.

 In the United States, more than one out of every ten drivers is uninsured, and the rate is much higher in other areas. For example, in Florida, 27% of drivers are uninsured, and this makes stacked insurance a tempting offer.

How does unstacked insurance work?

Unstacked car insurance is when you only have one coverage for one vehicle. Unstacked coverage can be defined as owning many cars or policies but electing not to stack them in exchange for reduced monthly costs. Alternatively, state law or the terms of your policy may restrict you from combining insurance coverage. 

When you have unstacked car insurance, no matter how serious your injuries are, your payouts are limited to your policy’s regular limitations for UM/UIM coverage. For example, if your policy’s limit is $40,000, you can only receive that amount if you file a claim.

Many insurance policyholders opt for unstacked coverage because stacked coverage is not accessible in their state.

What is uninsured motorist coverage, and how does it work?

Uninsured motorist coverage protects you if you get into an accident with someone who isn’t insured. Depending on the coverage offered, this can cover your injuries (UMBI) or property damage (UMPD).

Unstacked vs. stacked insurance: Which one should you choose?

Stacking insurance coverage limits may be the best option for you to boost your uninsured/underinsured motorist insurance coverage. Naturally, the more coverage you have, the more your policy will cost. If you stack your insurance coverage, though, you’re planning for the worst-case situation rather than the best. Your stacked insurance will protect you from paying out-of-pocket charges in the event of an accident with an uninsured or underinsured driver.

A conventional, unstacked auto insurance policy may be perfect for you if you are less concerned about this type of circumstance or only own/insure one vehicle.

Final Thoughts

Whether you have stacked or unstacked coverage, auto insurance is necessary. You can always chat with your insurance agent if you’re unsure which is best for you. If you have many vehicles to cover, they may be able to advise you on whether stacking insurance is right for you. To know more about how much insurance coverage you need, head here.

Last but not least, if your current car insurance policy is about to expire and you are looking for a new one that fulfills your needs, tap the banner below! Way.com’s car insurance quote estimator can help you get several quotes from the best car insurance companies in your state in under 10 minutes!

stacked insurance

Check out our blogs for info on finding top-rated airport parking, the best parking spots in your city, and affordable car washes near you.



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