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Stacking Uninsured and Underinsured Motorist Coverage

All states require at least a minimum amount of car insurance. So, in theory, you should be covered in the case of an accident.

However, this is not always true. Even though insurance is required, some drivers neglect to purchase it. If you are in an accident with an uninsured driver or a driver with insufficient insurance, you’ll need uninsured/underinsured motorist coverage (UM/UIM).

If you decide to purchase UM/UIM coverage, you may also want to consider increasing your protection by stacking this coverage.

What Is Uninsured/Underinsured Motorist Coverage?

An estimated 1 in 7 drivers in the U.S. is currently uninsured, according to the Insurance Research Council.

If you get into an accident with one of these drivers and you don’t have the right car insurance coverage, your budget could take a huge hit. Luckily, most car insurance companies offer coverage to help in these instances.

Uninsured motorist (UM) coverage applies if:

  • The other driver was at fault.
  • The other driver is uninsured.
  • You were the victim of a hit-and-run accident.

Underinsured motorist (UIM) coverage applies if the other driver is at fault and underinsured, meaning he does not have a level of coverage high enough to cover your costs. In this case, the other driver’s insurance company would pay the bills until the policy limit is reached; your insurance company would then pay the rest of your reimbursement up to your coverage limit.

UM and UIM coverage are broken down as follows:

  • Uninsured/underinsured motorist bodily injury coverage (UMBI/UIMBI).
  • Uninsured/underinsured motorist property damage coverage (UMPD/UIMPD).

Note that in many cases, only bodily injury coverage will be offered. Check with your auto insurance agent for details on what coverages are offered and the exact details of those coverages.

What Is Unstacked Coverage?

If your UM/UIM coverage is unstacked, your level of coverage equals the limit listed on your policy.

Example: If your limit is set at $25,000, you’ll only receive coverage up to that maximum amount after an accident.

If you only insure one car, unstacked coverage is your only option. However, if you have two or more cars and your state allows stacking, you can choose to stack your UM/UIM coverage.

What Is Stacked Coverage?

Stacking your coverage means that you increase your level of UM/UIM coverage according to the number of vehicles that you drive.

You can stack your UM/UIM coverage within or across policies.

  • Within policies: Combining coverage limits for multiple vehicles on one policy.
    • Ex: If you had 2 cars on a single car insurance policy and your UM limit was $40,000, you could potentially combine your UM coverage limits for a total of up to $80,000.
  • Across policies:
    • Ex: If you had 2 vehicles on 2 separate policies and your UM was $30,000, you could potentially file a claim using both policies, using up to $60,000.

Pros and Cons of Stacking UM/UIM Coverage

Stacking your UM/UIM coverage raises the potential amount of coverage you can use in case of an accident with an uninsured or underinsured driver. Also, some states forbid you to have UM/UIM coverage limits higher than those of your liability insurance if you do not get stacked coverage. That means that stacking your coverage lets you increase your UM/UIM limits without increasing your liability coverage.

The drawback to stacking your coverage is that your rates will be higher, since car insurance companies need to offset the risk of reimbursing you at a higher level.

Some states do not have laws about stacking, and others forbid or allow it expressly.

You can find out what is legal in your state by contacting your car insurance company. Even if states expressly allow stacking, your car insurance company may write a clause in your policy forbidding it.

Speak to your auto insurance agent to find out whether stacking is an option.

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