Understanding the Differences Between Stacked Vs. Unstacked Auto Insurance

Stacking insurance, in simple terms, means combining coverage. While stacked insurance covers bodily injury, unstacked insurance is limited to covering just physical damage. Stacked bodily injury car insurance extends your standard auto insurance policy when your plan includes uninsured motorist (UM) coverage and underinsured motorist coverage (UIM). This stacked coverage is useful when the at-fault driver lacks sufficient insurance to pay for damages.

Uninsured  Motorist (UM) and Underinsured Motorist (UIM)

UM, the coverage pays for damages caused by a driver who lacks auto insurance. UIM pays for accidents caused by drivers who do not have enough coverage to take care of all costs incurred in an accident. Each state has its own policy on how UM and UIM stacking can be applied to bodily injury coverage. For example, in some states, you can combine coverage limits if you own multiple vehicles, thus raising your coverage limits.

How Does Stacking Work?

In some states stacking is required, while in others, it is forbidden. However, even if you reside in a state that permits stacking, you may come across anti-stacking provisions in your standard policy. When stacking is allowed, it usually involves either one policy insuring multiple vehicles or multiple policies stacked in one driver’s name.

Stacked Vs. Unstacked Policies

The primary advantage of stacking is that it allows you to combine UM and UIM coverage limits for different vehicles under the same name. This strategy maximizes coverage according to UM and UIM limits.

The main disadvantages are higher premiums and the unavailability of stacking options in some states. On the other hand, an unstacked policy typically costs less and consists of fewer requirements. However, the problem with an unstacked policy is the unpredictability of what your out-of-pocket expenses will be.

Which States Allow Stacking?

Stacking is allowed in 32 states, although many states only permit it across multiple policies. For example, California does not allow stacking, but New York does if it is done across multiple policies. Other large states that allow stacking include Texas, Pennsylvania, Ohio, and Florida.

Alternatives to Stacking

Drivers are required to purchase personal injury protection (PIP) in states with no-fault laws. This coverage may overlap with similar situations involving UM and UIM. PIP coverage requires each driver involved in an accident to file a claim with their respective insurer. PIP not only covers medical bills and lost income, but also pays for funeral expenses, childcare costs, and other items.

The strategy of stacking uninsured and underinsured motorist coverage helps prevent financial disruption if an accident is caused by someone with low or no coverage limits. Contact us at Northeastern Group, LTD, to learn more about your auto insurance options.

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