Understanding stacked vs. unstacked insurance will help you better understand the type of protection you have when you are involved in an accident. The terminology designates whether the insurance policies for each of your vehicles should be combined or remain separate.
Stacked Car Insurance
When you have stacked car insurance, your insurance coverage per vehicle can have the limits combined for use in an accident with one specific vehicle to provide you with a greater amount of overall coverage. Coverages can be stacked vertically within one policy or horizontally across multiple policies. Stacking your insurance can provide better protection, especially against uninsured motorists.
According to The Zebra, most policies are sold unstacked, which means each coverage limit will apply only to that vehicle. If you are involved in an accident, your insurance company will pay out the claim up to the limit for the vehicle on its respective policy. For example, as WalletHub explains, if you have a coverage limit of $25,000 for one vehicle, that is the maximum amount of money that will be paid out, and you will be responsible for anything over that. If you have only one vehicle, your coverage will automatically be unstacked since there is no other policy to stack it with.
Basically, unstacked insurance is holding single policies for each vehicle you own. However, if your state allows it, you can stack some cars on one policy and have single coverage for another. Since the limits of an unstacked policy tend to be lower, the cost for premiums with this type of coverage is less.
Most policy stacking involves the uninsured/underinsured motorist coverage, which will provide you with the coverage you need if you are in an accident with a third party who is uninsured or does not have enough coverage to cover the damages. This type of coverage may or may not be required depending on your state’s insurance laws, as stated by Allstate.
How Stacked Insurance Works
To request stacked insurance, you must hold title to multiple cars on separate policies. The limits for uninsured/underinsured motorists will be combined on all policies to create one larger limit per accident. If you have two policies and they each have a $25,000 claim coverage for bodily injury, then you will have a total limit of up to $50,000 to cover medical expenses if you have an accident.
Vertical Insurance Stacking
Vertical stacking can be used in one policy. For example, if you were to have four vehicles under one policy, you can stack the coverage if your state allows it. So if you have $25,000 for uninsured/underinsured motorist coverage on each car, you would have up to $100,000 available for a claim.
You can also include family members in your household on your stacked policy as long as their vehicle is on your policy and the policy is in your name. You can also stack across two policies, one under your name and one under theirs, as long as your name is also listed on it.
Horizontal Insurance Stacking
You can also stack across multiple policies as long as they are under the same insurance company. This is called horizontal stacking. Doing so would emable you to claim an accident that involved an uninsured or underinsured motorist on multiple policies.
For example, if you were to have uninsured/underinsured motorist coverage on one policy for $20,000 for one vehicle and another policy with a $50,000 limit on a different car on a different policy, you could end up with a total of $70,000 in claim coverage.
Why People Choose to Stack Their Insurance
Because stacking allows you to combine the limits on your vehicles, it provides you with increased protection against accident-related expenses. The higher your coverage limits, the less you may have to pay out of pocket in the event of a claim.
JD Supra states that stacking is a great way to protect your assets and finances in the event of a severe accident with an uninsured or underinsured motorist. Severe accidents can result in greater damage and more substantial injuries, which can quickly add up to higher costs. While you can try to get the money from the underinsured/uninsured motorist, if they aren’t paying for coverage, odds are you will end up with very little. The extra coverage can prevent you from dipping into your savings or liquidating assets to pay for your repairs or medical bills.
Obtaining Stacked Insurance
Since coverage limits are higher, you can expect to pay higher premiums for the coverage. According to Policy Genius, whether or not you can stack your insurance will depend on a few factors such as:
- How many vehicles are on your policy
- Whether your insurance provider offers to stack
- Whether or not stacking is available in your state
States that Allow Insurance Stacking
One of the main factors that will determine your ability to stack your insurance is whether or not the state you live in allows stacked policies. Even if you live in a state that does, your insurance company will have its own rules regarding whether or not that policy option is available. States that allow stacking include:
- New Hampshire
- New Mexico
- Rhode Island
- South Carolina
- West Virginia
States that only allow stacking across multiple policies include:
- New Jersey
- New York
- North Carolina
In states that do not allow stacking, unstacked insurance will be the default.
Premiums for stacked insurance can often be higher than unstacked, so it might not be the best financial choice for everyone. It is important to note, though, that what you save on your premiums each year might not be enough to cover the out-of-pocket expenses you may incur if you do not have enough coverage when you have an accident with an uninsured or underinsured motorist. Hence, it is crucial to consider both factors.
Check this out if you need additional information, resources, or guidance on car insurance.
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