Choosing the right type of coverage is like finding the right pieces for the puzzle. One of the key decisions you will need to make is between stacked and unstacked auto insurance. You might be wondering, “What does that even mean?” Don’t worry, you are not alone!

These terms might sound technical, but they boil down to how your uninsured (UM)/underinsured motorist (UIM) coverage is structured and how it can protect you in an accident involving a driver who has less or no insurance.

Based on a thorough analysis by an online insurance provider, the average annual cost of auto insurance in the United States is $2,278. On the other hand, the average yearly cost of minimum coverage is $621. However, auto insurance is like a fingerprint; even though your situation could look similar to someone else’s, your premium will differ from friends, family, and the national average due to your unique rating criteria.

Let’s take a look in detail at the debate on stacked vs. unstacked auto insurance:

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What is Stacked Auto Insurance?

Stacked auto insurance refers to a type of coverage that allows policyholders to “stack” or combine their uninsured/underinsured motorist (UM/UIM) coverage limits across multiple vehicles in their household. This means that if you have multiple cars insured under the same policy, you can add up the UM/UIM coverage limits for each vehicle to increase the total amount available to you in the event of an accident involving an uninsured or underinsured driver.

How Stacked Insurance Works

● Coverage Across Vehicles: If you have two cars, each with $50,000 in UM/UIM coverage, stacking allows you to combine these limits, providing you with $100,000 in coverage.
● Protection in a Single Accident: This increased coverage is beneficial if you are involved in a severe accident with an underinsured or uninsured driver, as it offers greater financial protection for lost wages, medical bills, and other expenses.

Benefits of Stacked Auto Insurance

● Increased Coverage: It provides higher coverage limits. This can be quite helpful in serious accidents where damages exceed the limits of a single policy.
● Comprehensive Protection: It offers complete protection for you and your passengers, ensuring that you are better covered for medical expenses and other costs.
● Peace of Mind: Knowing that you have additional coverage can provide peace of mind, especially if you frequently drive in areas with a high number of underinsured or uninsured drivers.

Drawbacks of Stacked Auto Insurance
● Higher Premiums: The primary disadvantage of stacked auto insurance is the cost. Since it offers higher coverage, the premiums are typically higher than those for unstacked policies.
● Availability: Not all insurance companies offer stacked coverage, and its availability may vary by state.

Example of Stacked Insurance

Situation
You own two cars, each with $30,000 in UM/UIM coverage. You are involved in a severe accident with an uninsured driver, resulting in $60,000 in medical bills.

Outcome
You can combine the coverage limits of both vehicles, providing you with 60,000 in UM/UIM coverage. This will allow you to cover 100% of your expenses arising from the accident.

What is Unstacked Auto Insurance?
Unstacked auto insurance, on the other hand, does not allow for the combination of UM/UIM coverage limits across multiple vehicles. Each vehicle’s coverage limit stands alone, meaning that if you have two cars with $50,000 in UM/UIM coverage each, you cannot combine them to increase your total coverage.

How Unstacked Insurance Works

● Individual Limits: Each vehicle has its own UM/UIM coverage limit that cannot be combined with the limits of other vehicles in your household.
● Separate Claims: In the event of an accident, you are limited to the UM/UIM coverage amount for the specific vehicle involved in the accident.

Benefits of Unstacked Auto Insurance:
● Lower Premiums: Unstacked insurance generally has lower premiums compared to stacked insurance, making it a more affordable option for many drivers.
● Simplicity: With unstacked insurance, each vehicle’s coverage is straightforward and easy to understand without the need to consider combining limits.

Drawbacks of Unstacked Auto Insurance:
● Lower Coverage: The most significant disadvantage of unstacked insurance is the lower coverage limits. If you are involved in a severe accident, the coverage might not be sufficient to cover all expenses.
● Potential Financial Risk: Limited coverage can result in higher out-of-pocket expenses if damages and medical bills exceed the policy limits.
● Less Financial Security: In areas with high rates of underinsured or uninsured drivers, having limited coverage can leave you vulnerable to significant financial losses.

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Example of Unstacked Insurance
Situation
You own one car with $40,000 in UM/UIM coverage. You are involved in an accident with an underinsured driver, resulting in $60,000 in medical bills.

Outcome
You have $40,000 in UM/UIM coverage, but you must cover the remaining $20,000 out-of-pocket. Stacked insurance would not apply here since it requires multiple vehicles.

States That Permit Auto Insurance Stacking
You should think about stacked auto insuranceif your state has a high rate of uninsured drivers. This may be important if you or any of your regular passengers are not covered by health insurance. Here are two lists mentioning states that offer single and multiple policy stacking

Single and Multiple Policy Stacking States
● Arkansas
● Alabama
● Colorado
● Florida
● Indiana
● Hawaii
● Kentucky
● Missouri
● Mississippi
● Montana
● New Hampshire
● Nevada
● New Mexico
● Pennsylvania
● Ohio
● South Carolina
● Rhode Island
● Vermont
● West Virginia
● Virginia
● Wyoming
● Wisconsin
Multiple Policy Stacking States
● Georgia
● Delaware
● New Jersey
● North Carolina
● New York
● Oregon
● Oklahoma
● Texas
● Tennessee
● Utah

In conclusion, stacked and unstacked auto insurance have their advantages and disadvantages. The former offers increased coverage and better financial protection but comes with higher premiums and potential complexity. The latter is simpler and more affordable but provides limited coverage.

Your choice should be based on your specific needs, financial situation, and state regulations. Select an option that best suits your circumstances and offers the right level of protection.

Here’s a quick breakdown of both insurance types:

Feature Stacked Auto Insurance Unstacked Auto Insurance
Definition Combines the UM/UIM coverage limits of multiple vehicles or policies. Coverage limits are specific to each vehicle and do not combine.
Coverage Limits Higher combined limits across multiple vehicles or policies. Limited to the coverage of the specific vehicle involved in the accident.
Premium Cost Generally, higher premiums. They are due to increased coverage. Lower premiums because coverage limits are not combined.
Claim Scenarios Can draw on combined limits in the event of a claim. Restricted to the limits of the single-vehicle policy.
Protection Level Provides broader protection and potentially higher payouts. Provides protection up to the individual vehicle's limit.
State Regulations Availability and regulations vary by state. Some states do not allow stacking. Commonly available in all states without the need for specific regulations.
Suitability Ideal for those seeking maximum protection and willing to pay higher premiums. Suitable for cost-conscious individuals or those with fewer vehicles.
Risk Management Reduces financial risk in severe accidents by offering higher combined limits. Increased financial risk if the accident costs exceed the single vehicle’s limit.

Are you protected on the road? Don’t wait until it’s too late! Whether you are looking for the comprehensive coverage that stacked auto insurance provides or the affordability of unstacked insurance, BindRight has got you covered. We allow you to easily compare rates and coverage options from leading auto insurance providers. Enter your details and get instant quotes now.