Stacked Versus Non-Stacked Liability Limits for Your Personal Auto
Have you heard about “stacked versus non-stacked” coverage, but aren’t quite sure what that means? And the words “uninsured” and “underinsured” are associated with this type of coverage, but again, do you find them confusing? If so, you are not alone. We’ll try to shed some light on them for you and provide some talking points you may want to discuss with your agent. Your local independent insurance agent is your best source for insurance questions. They are experts in the field of insurance and can explain each coverage option in detail in a way that is easy to understand.
Stacking limits matters
Whether you choose to stack your limits or not makes a difference if you, a family member, or any passengers in your vehicle suffers a bodily injury as a result of an accident where another driver is at fault and they do not have enough insurance coverage to pay for your injury costs.
In this situation, they are either an “uninsured motorist (UM),” meaning they do not have insurance at all, or “underinsured motorist (UIM),” meaning the limit of insurance they have is lower or “under” what your injury costs are. You may hear or see these coverages referred to as UM/UIM.
Talk to your agent – Depending on the laws in your state, you may need to decide if you want to stack your UM/UIM limits. These coverages protect you in the event you have an accident with an uninsured or underinsured motorist by paying the balance of your bodily injury costs not covered by the at-fault party’s auto insurance, or lack thereof.
The stacked limits difference
The most your insurance company will pay (the limit of liability) for bodily injury depends on whether you have stacked or non-stacked limits for your UM/UIM coverage. If you have:
- stacked coverage limits, the limit of liability is the sum of the limits of liability shown in the Schedule or in the Declarations for each vehicle insured under your policy. Add together each vehicle’s UM/UIM limits for a combined total limit.
- For example, suppose an insured has UM/UIM limits of $100,000/person and $300,000/accident, and has three insured vehicles. If this insured chooses to stack the UM/UIM limits, those limits would increase to $300,000/person and $900,000/accident (the original limits multiplied by the number of insured vehicles).
- non-stacked coverage limits, the limit of liability is the amount listed in the Schedule or in the Declarations for the insured auto you were driving at the time of the accident. Each vehicle’s UM/UIM limits are treated separately and are never combined with the limits of your other vehicles.
In the instances above, a “Schedule” is typically part of the policy form that identifies specifics about a particular coverage, and “Declarations” are the front page(s) of your auto policy that lists the named insured, address, policy period, policy limits, and other key information regarding the policy.
Talk to your agent – Carefully assess your insurance coverage needs before selecting coverage limits. Your independent agent can be invaluable during this step of the insurance purchasing process.
Advantages and disadvantages of stacked limits
Premiums are typically lower for non-stacked coverage because the insurance company is only exposed to one liability limit. If you choose stacked limits, expect to pay more for your auto insurance premium. When you stack your limits, the insurance company is exposed to the amount of your liability limit multiplied by the number of vehicles on your policy.
Choosing to stack your limits provides the advantage of increasing the amount of bodily injury coverage available to you.
Talk to your agent – Each person’s situation is unique to him or her. Your independent agent can conduct a review of your coverage and discuss specific advantages and disadvantages particular to your situation.
Choosing stacked or non-stacked limits
Before making a choice about whether to stack your UM/UIM limits, discuss both options with your independent insurance agent. Depending on where you live, you may have more than one stacking option, or stacking may not be an option for you. Your agent will help you make the best choice for protecting your assets, and can also make sure you are receiving all available discounts to make your premium as affordable as possible.
Your independent agent is your local expert!
Speak with your local independent insurance agent about any aspects of your policy you do not understand. Your local agent can explain complex insurance issues, such as stacking versus non-stacking of limits. And always refer to your auto policy for definitions regarding words or phrases regarding coverage and limits.
Refer to your individual auto policy for specific coverage details. The information contained on this page does not take the place of your insurance policy and is intended for general information purposes only.