Stacked vs Unstacked Insurance – The Difference Between and What Does Each Mean

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Most jurisdictions require drivers to carry auto insurance if their vehicle is driven on roadways. This insurance is designed to cover a variety of situations which may occur when they involve drivers who do not have auto insurance, or do not have enough coverage, and are found to be at-fault for an accident which involves you.

Every state in the U.S. requires a minimum amount of car insurance. The Insurance Research Council reports, however, that about 1 in 7 drivers in the U.S. is currently driving their vehicle(s) without insurance.

If you carry underinsured motorist coverage, then you are covered if the other driver does not have enough coverage in their insurance policy to cover your costs, so you can be made whole. The underinsured driver’s company would pay your bills until their policy limit is reached.

Carrying uninsured motorist covers means your policy will cover costs if the other driver is at-fault and uninsured. You may also be able to access this section of your auto insurance policy if you are the victim of a hit-and-run accident.

There are two generic options that are available to you when seeking auto insurance: stacked and unstacked insurance.

What Is Stacked Insurance?

Stacked insurance is designed to increase how much coverage you have under the uninsured motorist and underinsured motorist limits that are associated with your policy. They are referred to as UM and UIM riders by some.

The coverage available or required for UM and UIM varies from state to state in the U.S., but the goal of this coverage remains the same. It will help to pay for post-accident property expenses and medical coverage if you’re hit by someone that doesn’t have enough insurance or isn’t carrying it at all.

Stacking allows you to place this coverage option on more than one vehicle within the same policy or do so across different policies.

If you stack within one policy, then it will usually involve bodily injury coverage. As an example, let’s say that you currently own 3 vehicles and each one carries a $15,000 bodily injury coverage for uninsured motorists.

If you are hit by a driver that doesn’t have adequate insurance coverage, you would be able to “stack” the coverage limits for each vehicle in your policy. That would give you $45,000 of coverage instead of $15,000 for the one vehicle as originally insured.

Now let’s say that you have two separate policies instead. You’re keeping a policy for an SUV and one for your car that are separate from each other, but through the same provider. In this situation, you could file a claim under both policies if you have stacked insurance. The only stipulation here is that all the policies would need to be under name.

What Are the Advantages of Stacked Insurance?

If you have stacked insurance, either across multiple policies or in one policy, then you’ll have higher coverage limits after an accident that is caused by an underinsured or uninsured driver.

Although you’ll pay more for this added level of protection, your limits of coverage are not capped by the single vehicle rate. At the same time, you’re not required to raise your liability limits on each vehicle.

Of course, the advantages of stacked insurance only apply if you’re in an accident where the fault lies with the underinsured or uninsured motorist. If you’re determined to be at-fault in the accident, then the stacked coverage would not apply.

What Is Unstacked Insurance?

Unstacked insurance is the exact opposite of stacked insurance. This type of policy treats each vehicle’s coverage as a separate entity in every situation. It doesn’t matter how many vehicles are insured, under one policy or different policies.

With unstacked insurance, if you are hit by an underinsured or uninsured driver, then your policy will cover the qualifying expenses until the limit is reached. The limits are based on the vehicle you are driving that is involve in the accident.

Although you’ll usually pay lower premiums with your car insurance with unstacked insurance because you have lower single-incident limits, you may also find that your insurance may not cover all of your post-accident expenses.

In that type of situation, to be made whole, you may be forced to pursue legal proceedings against the individual who caused the accident. That requires legal costs and time commitments that will reduce the value of the award or judgement you may be able to secure.

It is also important to remember that a judgement is not a guarantee of payment. If the driver who struck you is unemployed and has no income sources, then it may be months, if not years, before you’re able to collect on the amount you were awarded by a judge. The value of money goes down each year, so a 5-year delay in payment from a judgment does not really make you whole.

Anti-Stacking Provisions Found in the United States

There are several states in the U.S. where stacking is difficult, if not impossible, to achieve with your auto insurance.

In Florida, stacking is only permitted if specific notice requirements are fulfilled by the insured. Then the insurer is required to revise their premium rates to reflect a reduction of coverage premiums by at least 20%.

In Nevada, state laws permit insurers to limit stacking insurance options for consumers. Any such limiting action must meet three specific requirements to be considered legally valid. There must be clarity in the stacking limitations, the information must be prominent within the policy, and those who are insured cannot have purchased separate coverage on the same risk or paid a premium that was calculated for full reimbursement.

Many states, including Texas, do not have insurance statutes which speak to whether stacking or anti-stacking actions are legal, binding, or valid. In these states, the court systems have found that the provisions tend to be ambiguous, so rulings tend to go in favor of the intent of the policy.

In Ohio, any anti-stacking provisions which are put into a policy, assuming they are clear and unambiguous, have been found to be fully enforceable. Virginia follows this precedent, although their courts have also taken the position that stacking is assumed to take place unless language within the policy specifically excludes it.

States like Kansas go to the full extreme, with anti-stacking laws placed on the books. In Rhode Island, the other extreme is present, as insurers are required to allow people to stack coverage when seeking auto insurance.

Statistics of Uninsured and Underinsured Drivers in the United States

For drivers who operate vehicles while being uninsured, the Financial Responsibility and Insurance Committee found in a survey that 82% of the people in this group can’t afford the insurance or their vehicle is either not in use or inoperable.

Florida has the highest rate of uninsured motorists in the United States. The Insurance Information Institute reports that 26.7% of drivers in 2015 were uninsured. Mississippi, New Mexico, Michigan, and Tennessee all had rates where 1 in 5 drivers on the road were uninsured.

The Insurance Information Institute also reports that Maine has the lowest levels of uninsured drivers, at just 4.5%. Several states have fewer than 7% of their drivers uninsured, including New York, Massachusetts, North Carolina, Vermont, and Nebraska.

If you have the option to stack your insurance, then consider doing so if you can afford this flexibility. It will give you better coverage if you find yourself in a situation where an accident has occurred because of the actions of an underinsured or uninsured driver.

Stacking your insurance protects you against expensive hit-and-run accidents as well. You may be asked to file a police report in this type of situation to take advantage of what your insurance policy covers.

Unstacked insurance will still provide you with underinsured and uninsured motorist coverage. The only difference is that you’re going to be limited to the limits which apply to the specific vehicle that is involved in the accident.

Drivers who do pay for this insurance are ultimately paying for the actions of those who choose not to carry auto insurance or have an under-valued policy. The total bill for U.S. drivers who must deal with underinsured and uninsured motorists is more than $12 billion per year.

That figure doesn’t account for the costs which taxpayers face when taking an uninsured motorist to court, trying to make uninsured drivers pay fines, or the cost of revoking their driver’s license.

The average insured driver pays $67 per year to cover uninsured and underinsured drivers and it is only getting worse. That is why it is so important to understand the benefits of stacked insurance and if you can take advantage of them.