Difference between stacked and unstacked coverage

by charles Bender » Mon Nov 05, 2007 06:18 pm

With uninsured motorist insurance what is the differtent between stacked and unstacked?

Total Comments: 7

Posted: Tue Nov 06, 2007 02:07 am Post Subject:

Stacked coverage means that you may combine the coverage limits for each automobile insured under your policy. For example, you may insure three autos and obtain stacked coverage with limits of $10,000 per person and $20,000 per accident for each auto (known as 10/20 limits). Your stacked, or combined, coverage will total $30,000 per person and $60,000 per accident. If the coverage was unstacked, then the limit of coverage for each vehicle would be $10,000 per person and $20,000 per accident. Insurance companies may offer unstacked coverage at a reduced cost, since they will only pay the maximum amount allowed for one insured automobile. What state are you in?

Posted: Wed Nov 07, 2007 06:30 am Post Subject:

Normally the coverage limit defined in the UM policy applies to each vehicle enlisted under the policy. Now if you are allowed (many states don't allow this) to stack the policy you will then be able to collect the compensation from all the vehicles in the policy. I hope it is already clear to you ‘how the coverage multiplies' from my previous posters example.

Stacked UM coverage may come handy if the loss amount exceeds the limit of coverage on a single car. You can then gain full coverage under the UM policy. let me present that with an example.

Suppose, the UM coverage level available on a single car is 10/20 but you have sustained total loss of $15,000 in an accident. Under normal circumstances, you are supposed to pay the remaining $5,000 form your pocket. Staked UM coverage, however, saves you from this. It will cover the total loss of $15,000.


Posted: Wed Nov 07, 2007 06:56 am Post Subject:

If you ask for my honest opinion, I would rather prefer staking UM coverage. Agree, it is expensive but at times wise. Even the latest data suggest that about 30% of the motorists in US drive without coverage. Therefore, if you become a victim of an accident and to your horror discover that the other driver doesn't carry the auto policy, you have no option other than filing the claim with your carrier. Staking UM coverage obviously pays off if the loss amount is greater than the coverage limit available on the vehicle. However, you can stack your vehicle insurance coverage only if you own more than one vehicle.

Posted: Wed Nov 07, 2007 11:39 am Post Subject:

Couple of points....All states do not allow stacking...some that do have the following exclusion. The vehicles must be on the same 'policy' meaning if husband and wife (lets say), in same household have different policys, (lets say they just married and didn't change to the 'same one, same company, but different policys), then stacking can be excluded.

I haven't heard of paying an additional premium that would allow stacking, not that this may not be true, I just haven't heard of it. The way I've always understood it is the above, and either your state allows it or it doesn't. Another point, most states that allow UM stacking also allow UIM (Under Insured Motorist), stacking, assuming of course you have the coverage.

Posted: Tue May 20, 2014 06:59 pm Post Subject: Stacking of Limits what is it?

Maybe somebody out there can clarify this for me: recently I was in a group of people where someone was saying that if one had a $1m umbrella and $10,000 liability coverage on their HO policy, they would have $1,100,000 coverage.
I told them that they would not and that that is what the insurance industry calls "stacking of limits" - they would have the 1 mil.
Am I right or wrong?
Please advise!
Thanks, Saucey

Posted: Wed May 21, 2014 02:02 am Post Subject:

Am I right or wrong?

You are wrong and wrong.

$1,000,000 and $10,000 would be $1,010,000 in coverage, not $1,100,000.

Umbrella coverage is secondary to other liability coverage. This is not the same thing as stacking. How this would work is that the liability carrier would pay their $10,000 limits and then the umbrella carrier would be their $1,000,000 limits. So the person would have $1,010,000 in coverage but it's not stacking. Stacking applies to UM (uninsured coverage). It means if you have two vehicles, each with $25,000 in UM and you can stack then you essentially have $50,000 in UM coverage. You don't get one and then the other... you simply add both together.

Posted: Fri May 23, 2014 05:39 am Post Subject:

Even more wrong that what tcope has written about (and everything he wrote is accurate) is the fact that you cannot get a $1,000,000 umbrella liability policy on top of just a $10,000 HO or auto policy liability limit and truly have $1,010,000 in protection.

Before you can obtain umbrella liability coverage, you must be carrying very high limits of liability on your other subject insurances. An HO policy would require at least $250,000, and an auto policy would require at least $100,000, but probably more like $250,000 or $300,000.

Typically, you must purchase the highest liability limit available for the type of insurance in order to minimize the risk to the Umbrella provider. The umbrella policy will have a "retention" amount -- another word for "deductible" -- that must be reached before the Umbrella policy would even begin to pay a claim. Ideally, the retention would be the same as the limit of liability in your HO and auto policies. If the umbrella had a $250,000 retention amount, and you only had $10,000 in liability coverage, you would be exposed to $240,000 in out-of-pocket loss before the umbrella would begin to pay. That just doesn't make sense. You would only pay about $150-$200 per year to increase the liability limit of an HO policy from $10,000 to $300,000. Why expose yourself to $240,000?

No experienced agent would ever allow you carry a ridiculously low limit of liability such as $10,000 in an HO policy. If someone told me that's all they wanted, I would, in no uncertain terms, tell them they needed to find another agent, or go online and do-it-yourself.

And as far as UM stacking is concerned, not all states permit this. And even when they do, it doesn't mean your going to get a check for $25,000+$25,000 simply because another driver did not have insurance. You cannot obtain more than your actual loss. (And if the at-fault driver is underinsured rather than uninsured, there will first be an offset against the amount of insurance that was paid. So if your damages are $30,000 and the at-fault driver had $10,000 of liability, your UM coverage would pay you the additional $20,000, assuming you had at least that much UM coverage.)

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