Getting the Most Out of Your Car Insurance-part 1

by Timothy A. Shollenberger, Esq.

This is the first in a series of articles that we have decided to write to aid you in getting the most for your car insurance dollar. We suggest that you retain this newsletter with your insurance papers and consult it the next time you receive a premium notice from your insurance company.

Stacking - What It Means and Why You Should Have It

Stacking is a choice you must make when selecting uninsured and underinsured motorist coverage. Uninsured motorist coverage protects you and members of your family if you receive bodily injury due to the fault of a driver who does not have car insurance. Underinsured motorist coverage protects you and members of your family who receive bodily injury due to the fault of a driver who does not carry enough insurance.

Stacking allows you to increase the amount of uninsured and underinsured coverage at very low cost. Think back to when you were little and played with building blocks. If you “stack” your uninsured and underinsured coverages, you are simply taking the number of blocks on the floor (represented by the number of cars you own) and building a tower with them. The more blocks you put on the stack, the higher it is (i-e. the more coverage you will have.) (Remember also that you have two piles of blocks, one for uninsured coverage and another for underinsured coverage. They are not the same coverage and you can never get both for the same accident.)

Here's how stacking works: Assume that you own two cars. Once you decide you want uninsured and underinsured motorist coverage (you should always want it), you can then tell your insurance agent that you want to “add together” the amount of uninsured and underinsured motorist coverage that you bought for each vehicle on the policy. (In other words, “stack” the coverages.)

Now for an example: Assume John Jones owns two cars. Let's assume further that John decides to purchase uninsured motorist coverage in the amount of $100,000 per vehicle and underinsured motorist coverage in the amount of $100,000 per vehicle. John then decides to “stack” both his uninsured and his underinsured coverage. How much uninsured coverage does John and his family have? How much underinsured coverage? If you said $200,000 in each category, you are correct.

Let's assume that John decided he would not “stack” his uninsured and underinsured coverage. How much uninsured coverage would he have then? How much underinsured coverage? If you said $100,000 in each category, you are right again.

Let's assume further that John is in a serious accident, which tragically leads to his death, caused by a person who did not pay his car insurance on time and had no insurance. If John chose stacking, how much uninsured motorist coverage can his family collect as a result of his tragic death? If you said $200,000, you are correct. But what if he rejected stacking, then what would his family collect? Unfortunately, only $100,000. Changing the facts slightly, let's assume the person that caused the accident had insurance, but only the minimum of $15,000. If John chose stacking, how much underinsured coverage could John's family collect in addition to the $15,000 in coverage of the other driver? If you said $200,000, you are correct. If John rejected stacking how much underinsured coverage would his family collect in addition to the $15,000 in coverage of the other driver? The answer is $100,000.

Stacking is typically very inexpensive coverage. To determine the amount of additional cost for stacked coverage as opposed to non-stacked coverage, ask your agent these questions: “How much more will stacked uninsured motorist coverage cost me than non-stacked uninsured motorist coverage?” and “How much more will stacked underinsured motorist coverage cost me than non-stacked underinsured motorist coverage?”

How can you find out if you have stacked coverage or not? The quickest and easiest way is to call your insurance agent and ask. However, you can also look at your policy (typically the document that comes with your bill called the declaration page will say it).

Below you will see an example of a declaration page that provides, “stacked coverage.”

How do you change your uninsured and underinsured coverage from non-stacked to stacked? Telling your agent you want to change the coverage is a good first step. But you should follow it up with a letter in which you specifically state that you “revoke your earlier selection of non-stacked uninsured and underinsured motorist coverage.”

If after reading this article, you are still unclear as to the meaning of “stacking,” please contact us. If you would like additional copies of this newsletter, let us know and we will be happy to supply them.