What Is Insurance Stacking and Should I Do It? – Technologist

It’s estimated that around 13% of drivers are uninsured! Fortunately, insurance companies offer uninsured and underinsured motorist coverage to protect you if one of these drivers harms you or damages your car.

Depending on your insurer and where you live, you might even have the option to stack your UM/UIM coverage. But what exactly is insurance stacking and is this something you should do for the ultimate protection? In this article, I’ll answer:

• What Is Insurance Stacking?
• How Does Stacked Insurance Work?
• What States Allow Stacked Insurance?
• Should I Stack My Insurance?

What Is Insurance Stacking?

The first thing to know about insurance stacking is that it applies to uninsured and underinsured motorist (UM/UIM) coverage on auto insurance policies. While some states require UM/UIM coverage as part of their state minimums (we’ve got a list of each state’s minimum insurance requirements), others leave it up to you to decide.

Money expert Clark Howard calls UM coverage “one of the most important things” you can have on your auto insurance. You check out our breakdown of why uninsured motorist coverage is so important here. But here’s how they work:

• Uninsured motorist coverage protects you when you’re hit by someone who doesn’t carry any liability insurance
• Underinsured motorist coverage protects you when you’re hit by someone who does have insurance, but their policy coverage limits aren’t enough to cover the costs resulting from an accident

Insurance stacking gives you the option to combine your uninsured and underinsured coverage limits for multiple vehicles or multiple policies in the event of an accident. Of course, for any coverage you have, your coverage limit is the point when your insurer will stop paying. By selecting the option to stack your insurance, you have a way to increase your coverage limit in real time, should you need more financial assistance than a single vehicle or policy has on its own.

How Does Stacked Insurance Work?

Insurance stacking can be done in one of two ways. You can either stack insurance “horizontally” (across multiple policies) or “vertically” (within the same policy). To stack insurance horizontally, your name needs to be on multiple auto insurance policies. Maybe, for example, you have a policy for your car but your spouse has a different policy that you’re also listed on as a driver. Vertical stacking, on the other hand, is an option when you have multiple cars insured on the same policy.

To understand how this works, consider this:

Let’s say you and your partner own two cars. Each car has its own policy, so your insurance is stacked horizontally. Car A has a UM/UIM coverage limit of $10,000/$20,000 and Car B also has a UM/UIM coverage limit of $10,000/$20,000. Now let’s say an uninsured driver hits you while driving car A.

Without stacked insurance, your UM coverage limit would be $10,000 in this scenario. If you’re in an accident and the resulting costs come up to $12,000, you would need to come out-of-pocket for $2,000. But with stacked insurance, your coverage limit now becomes $20,000 since you can combine the coverage limits from both policies. In this case, you wouldn’t need to come out-of-pocket at all.

What States Allow Stacked Insurance?

Auto insurance is regulated at the state level. This means where you live can determine whether insurance stacking is available to you. States also decide how you can stack insurance. While some states allow vertical and horizontal stacking, others will only allow you to stack horizontally.

These states will allow you to stack insurance across multiple policies only:

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

If you live in any of these states, you can stack insurance across multiple policies or within the same policy:

• 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

It’s worth noting that while your state might allow insurance stacking, individual insurers may choose not to provide the option for policyholders.

Should I Stack My Insurance?

Here are a few questions to consider if you’re deciding whether to stack your insurance:

• What percentage of drivers are uninsured in your state?
• What are your state’s minimum insurance coverage limits?
• How would you be impacted financially if you suddenly had to repair or replace your car after being hit by an uninsured/underinsured driver?
• How would you be impacted financially if you or any of your regular passengers suddenly had medical bills after being hit by an uninsured/underinsured driver?
• How will stacking insurance change your auto insurance premiums?

If you live in a state with a higher percentage of uninsured drivers, stacking might be a great way to increase your protection. Similarly, if your state has low minimum coverage limits, stacking can offer more protection against underinsured drivers.

You also want to think about the realities of what it might cost to get back to normal after an unexpected accident. Of course, there will be the cost to repair or replace your ride. But you also have to think about medical costs, especially if you or any people you regularly drive don’t have any health insurance.

Ultimately, if you have the option to stack your insurance, it’s worth getting quotes to see if this is a cost-efficient way for you to boost your UM/UIM insurance coverage. While you’ll likely see your premiums increase if you choose to stack, the price bump might not be significant. In fact, stacking might be cheaper than if you were to get higher coverage limits for each individual policy or vehicle.

Final Thoughts

Insurance stacking is a way to boost the coverage limits on your uninsured/underinsured motorist protection. It’s not an option in every state, but if your state and insurer allow it, it’s worth getting quotes. You might be surprised to find it’s a cost-efficient way to have additional peace of mind while on the road.

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