Drivers in Minnesota may hear the terms “stacked insurance” and “unstacked insurance” when discussing their auto insurance policy. While the words may sound complex, they are relatively easy to understand.
Stacked insurance
Stacked insurance applies to uninsured and underinsured motorists coverage, providing the option to combine coverage limits for several vehicles. The coverage limit is the maximum amount an insurer will pay toward a covered claim. By combining separate coverage limits into one higher limit, drivers can increase their protection if a car they own is involved in an accident with an underinsured or uninsured driver.
How stacking works
Consider a scenario where you have your name on two car insurance policies. One is for your vehicle, and the other is for a family member in your household. In this case, the uninsured motorist bodily injury (UMBI) coverage on your car is $25,000, and the coverage on the vehicle owned by your family member is $30,000. If you stack coverage across the two policies, your UMBI coverage increases to $55,000. This means that your insurer could assist in covering medical bills up to $55,000.
The pros and cons
Stacking combines your uninsured motorist coverage on multiple vehicles, boosting your protection against accident-related expenses. The higher your coverage limit, the less you might pay out-of-pocket toward a claim. However, the downside of stacking is that the premiums for the coverage are higher.
On the other hand, unstacked insurance offers lower premiums but leaves you at a higher risk of paying out-of-pocket for accident-related expenses.
The only thing worse than not having car insurance is not having enough insurance to cover you in the event of an accident. Taking the time to learn about stacked and unstacked insurance options can put you in a position to protect yourself financially in a car accident.