Nick Walker
Risk Management and Insurance 385
4/18/12

Stack Insurance Coverage

Insurance, what a vital attribute that people are in need of in today’s’ society. Stacking insurance coverage for uninsured and underinsured motorists is a new process to the insurance world and could potentially save someone’s life financially. A driver who isn’t insured is considered an uninsured motorist, while a driver who just doesn’t carry enough insurance to cover losses in an accident is considered an underinsured motorist. Regular uninsured/underinsured motorist coverage’s compensate the victim for an accident from a driver who is either uninsured or underinsured. Even though uninsured/underinsured motorist coverage will compensate some for damages, some accidents cause very severe injuries and even a generous coverage will not pay medical bills in full. Although this is the case for many states, some states allow you to get around this and help pay for the damages by “stacking” uninsured and underinsured insurance coverage. When I say “stacking” your uninsured and underinsured insurance coverage, the term “stacking” simple means you are able to collect from more than one car insurance policy to receive full payment for your injuries and property damage. Stacking insurance coverage can only apply if you have more than one car covered. Insure.com gives a great example on a generalized stacking insurance case. Lets say you own an auto insurance policy under which two or more cars are insured with uninsured and underinsured coverage. When an uninsured or underinsured motorist hits you, you collect the limits of your uninsured or underinsured coverage under as many vehicles as necessary to receive full payment for your damages. If you have a two-car policy with $50,000 worth of bodily injury on your uninsured and underinsured coverage per person on each car, you can collect up to $100,000.
Insure.com also gives another example as if you were to have two policies with two different insurance providers. Lets say you own more than one auto insurance policy with uninsured and underinsured coverage. (The policies could be with the same insurer or two different insurers.) To collect all of the damages, you could make a claim under the uninsured and underinsured coverage of each of the insurance policies you own. For example, if you have one policy with $50,000 worth of uninsured and underinsured bodily injury coverage per person and another policy with $25,000 worth of uninsured and underinsured bodily injury coverage, you can collect up to $75,000 for any injury you suffer as a result of a collision with an uninsured or underinsured motorist. This is “stacking” insurance coverage in a broad sense.
There are both advantages and disadvantages of stacking auto insurance. The key advantage to stacking auto insurance is that if you have multiple cars, stacking allows you to significantly enhance your policy payment limits for uninsured and underinsured bodily injury. Once you add coverage for two or more cars, those policy benefits can become considerable.
Disadvantages of stacking auto insurance coverage, carsdirect.com says, in fact, pose a danger for the auto insurance industry as a whole. Cardirect.com also states that “when uninsured and underinsured bodily injury coverage was first proposed, the industry did not anticipate the ability to stack coverage for several cars into combined higher coverage limits.” As more states have come to allow stacking, payouts for claims have the possibility to be much higher than originally intended. As a result, there is the likely danger that insurance companies will try to recover their losses by raising premiums for stacked coverage high enough to outweigh the benefit for consumers says carsdirect.com. Carsdirect.com also states that the auto insurance industry makes arguments against stacking. One of which one is that coverage limits are too high and can result in a loss of profits for them.