Stacked Versus Unstacked Car Insurance – Coverage Insights
One of the most important coverages within your automobile insurance policy is for uninsured and underinsured motorist coverage. In the United States, it is estimated 12.5 percent of drivers are uninsured. This is in light of all states requiring at least a minimum amount of coverage.
As a way for individuals and business owners to protect themselves from these risks, insurance companies offer uninsured and underinsured motorist coverage, or UM & UIM for short. The additional coverage provides financial security when your fellow motorists do not abide your state laws or did not purchase enough coverage to make you whole after an accident.
Understanding UM & UIM Coverage
Most automobile accidents involve two or more vehicles. However, uninsured and underinsured motorist also provides coverage in the instance when you suffer damage or injury as a pedestrian, bicyclist, or a bystander.
If you are injured by a motorist, regardless of whether or not you were driving yourself, the at-fault party becomes responsible for your damages and injuries (above any minimal no-fault limit). Your own automobile policy’s uninsured or underinsured motorist coverage would apply when:
- The other driver was at fault.
- The other driver does not have insurance.
- The other driver does not have enough insurance to cover your damages or injuries.
- The other driver flees the scene of the accident.
It is important to understand exactly which coverages are afforded to you under your policy. Many times, as a way to reduce your premium, only uninsured coverage for bodily injury is provided for on a policy.
It is important to work with a reputable insurance agent to review all options available, including underinsured motorist coverage and coverage for physical damage to your property by an uninsured or underinsured driver.
Stacking Your Coverage
Simply put, stacking uninsured and underinsured limits increases the total amount of insurance available to you in the event of an accident. Stacking limits is only possible when more than one vehicle is insured by an individual or business. Depending on the state you live in, stacking may be done within the same policy or across multiple policies.
Let’s say, for example, you insured three vehicles under the same policy. UM & UIM limits are provided for on a per vehicle basis. If you had purchased UM & UIM limits of $50,000, stacking the limits would provide for a total limit of $150,000 in the event you are involved in an accident with an uninsured or underinsured motorist.
However, if you have two separate automobile insurance policies with the same insurance carrier and under the same named insured, you may be able to stack coverage your coverage. For example, if each policy has $100,000 of UM & UIM coverage, stacking would make available $200,000.
Advantages and Disadvantages of Stacking
The most compelling advantage of stacking is increasing the limit available to you in the event of a UM or UIM accident. In most states, to obtain limits on a per vehicles basis equal to those made available by stacking would require increasing your liability limit. This additional increase may be prohibitively expensive when you are only seeking to increase your UM & UIM coverage.
The disadvantage of carrying unstacked coverage is the limit may be too low to cover your post-accident expense. This leaves us with the only disadvantage to stacking coverage, which is the additional premium required. Although less than increasing limits individually by vehicle, insurance companies do charge for this expanded coverage.
Coverage Beyond the Automobile
Conversations about uninsured motorists often conjure up images of hit-and-run accidents. These are incidents where a driver causes a car wreck, only to flee the scene of the crime, making a bad situation even worse for the victims.
But uninsured and underinsured motorist also protects those who are not old enough to drive, our children. Too often we see headlines of a child hit by a vehicle at a bus stop, walking in the neighborhood, or simply playing near the street, only to have the driver drive away never to be seen again.
In these very tragic circumstances, it is the parent’s automobile policy with UM & UIM coverage, which can provide funds necessary to assist in recovery. Although health insurance may be available to support medical costs when unrecoverable from the driver, the ability to be compensated for pain and suffering may be the most costly outlay.
Whether you are a business owner or an individual, if you own a vehicle, call our offices at (850) 942-7760 to learn about uninsured and underinsured motorist coverage available to you and our other personal and commercial risk management solutions.
Demont Insurance Agency, Inc. The Insurance You Need, The Assurance You Deserve.