Stacked vs. Unstacked Insurance (What’s The Difference?)

As a driver, you have to settle for the fact that you need car insurance. It is essential, it is necessary, and the law requires it.

Because it is a requirement, you would think shopping for car insurance is straightforward. No, it is not.

Selecting the car insurance coverage you need, and the limits you can afford is tricky, particularly when you are strange to some of the car insurance terminology.

One of those confusing terms is “stacked” and “unstacked” car insurance.

These terms all sound confusing, but they should not be. So, what are they? Is stacking insurance an option for you?

To understand stacked or unstacked insurance, you need first to understand uninsured or underinsured car coverage.

Let’s dig in to find out:

Uninsured vs. Underinsured Coverage

In the industry of car insurance, there are two important terms for drivers:

  • Uninsured motorist coverage (UM)
  • Underinsured motorist coverage (UIM)

Uninsured and underinsured car coverage protects you if you are hit by a motorist or driver who has insufficient coverage of their own.

Uninsured motorist coverage (UM): covers you when you are involved in an accident with a driver that doesn’t have car insurance.

Underinsured motorist coverage (UIM): covers you when you are involved in an accident with a driver who has insurance, but the insurance limits are not sufficient enough to pay for the driver’s damage.

You can get uninsured and underinsured coverages together or separately, depending on your insurance company.

Also, insurers offer two categories of uninsured and underinsured coverages:

  • Bodily injury.
  • Property damage.

Body Injury

Covers injuries you or your passengers sustain when the underinsured or uninsured driver is at fault. It also covers you in a hit-and-run situation. It pays for injury-related expenses, including medical costs and lost wages.

Injured man with deep wounds and corset on his neck sitting on the driver seat during the medical assistance after the accident

Property Damage

Covers any damages to your car when it is hit by the underinsured or uninsured driver.

What happens when you do not have uninsured or underinsured coverage? You can increase your coverage limits.

This is where stacked and unstacked insurance comes to play.

Stacked vs. Unstacked Car Insurance

These terms might confuse you. Worry not because you are not alone. Insurance terms have confused so many people.

Stacking insurance is a method of increasing your uninsured motorist or underinsured motorist coverage.

Here are their simplified definitions:

Stacked Coverage

Stacked insurance increases your uninsured motorist (UM) and underinsured motorist coverage (UIM), depending on how many cars you own.

Stacked coverage allows you to combine – or “stack” – each car’s limit into one shared limit, offering you a more substantial total coverage amount. Isn’t that something good?

As a result, you can receive full payment for your injuries or damages to property.

Unstacked Coverage

Unstacked coverage is not the exact opposite of stacked coverage, but something close. It applies your standard coverage limits to one particular car, without the chance to combine the amounts.

In simple terms, unstacked coverage means that you are not combining your coverage limits, which means your UM/UIM coverage limit is whatever your insurer has listed on your policy.

If you only have one car, it means your UM/UIM coverage is automatically unstacked, because you do not have anything else to stack it with.

How Does Stacked Coverage Work?

Now here is how the stacking concept works.

You could be having one car or multiple cars.

body kit

If you have one car, you cannot stack or combine your coverage.

If you have multiple cars insured, then depending on your provider or your state, you can “stack” your insurance to combine your coverage limits in the event of an accident.

Stacked coverage often works in one of the following two ways:

  • Stack with one policy.
  • Stack across multiple policies.

Stack With One Policy

This is where you can combine multiple cars on one insurance policy.

You will be able to combine the limit of each car’s uninsured motorist coverage to create a higher composite limit, which will provide you with more coverage.

This is how stacking within one policy works.
Say, for instance, you have two cars on the same policy where you have an uninsured motorist coverage limit of $20,000. You can stack those two car coverage limits for a combined total coverage of up to $60,000. You can use the $60,000 in case one car gets involved in an accident with an uninsured driver.

Having up to two times the amount of coverage you would have otherwise had with one car will, of course, come in handy if you are involved in an accident with an uninsured or underinsured driver.

Stack Across Multiple Policies

You can also stack two or more of your cars’ uninsured or underinsured motorist coverage on separate policies, as long as the policies are on your name. This can happen if you have more than one vehicle, each with a different policy.

Often you will also need to have all the policies with the same insurance provider. You will be able to combine the limits of each policy’s uninsured/underinsured motorist coverage.

However, you do not have the guarantee of the availability of either option.

This is how stacking across multiple policies work.

insurance policy concept

Say, for instance, you have $30,000 in underinsured/uninsured motorist coverage on one car and another $30,000 under a different policy on the other car. You can stack those coverages to raise your limit to $60,000, although they are two separate policies.

Stacked vs. Unstacked: Which Coverage Is Right For You?

Well, unstacked insurance is the default car insurance option because it is what you would still have if you only had one car, so it is not an option.

But, there is one unfortunate truth while you drive on the road. So many uninsured motorists drive with you on the road. If you are involved in a crash with one of them, it can be challenging to get cover for bodily injury.

That said, if stacking is an option that you have access to, then it is probably a good idea to choose.

As long as your state and your insurance provider allow it, there are more upsides than downsides to stacked coverage.

Here is an important point to note:

A stacked coverage will cost a little higher, more than normal coverage, but the additional coverage will be useful in case of an accident.

This is because underinsured motorist coverage begins where the at-fault driver’s liability insurance stops. As a result, it will help cover medical bills that the liability insurance’s limit could not cover.

Medical bill and health insurance form with calculator

Bottom Line

Purchasing insurance can be a little tricky, especially if you are new to it.

At the same time, driving on the road is riskier than you can imagine, particularly when you don’t have adequate insurance. And, who would not want an additional cover when an unexpected loss occurs?

That is where stacked insurance comes in.

If your car insurance company and your state allow it – and if you can afford the extra cost – stacking your underinsured or uninsured motorist insurance limits is a great idea.

Even then, you should be cautious. Ask your insurer about any limitations, which may come with stacked insurance, and ensure you are taking coverage that serves your best interest.