Legal Definitions - policy stacking

Policy stacking refers to the practice of combining the coverage limits from multiple insurance policies to increase the total amount an insured individual or entity can recover for a single loss or incident. This concept is most commonly applied to uninsured motorist (UM) and underinsured motorist (UIM) coverage, allowing policyholders to access the limits from more than one policy, or from multiple vehicles listed on a single policy, to cover their damages.

• Example 1: Stacking Coverage from Multiple Vehicles on a Single Policy

  Imagine a person who owns three cars, all insured under one comprehensive auto insurance policy. Each car is covered with $50,000 in uninsured motorist (UM) coverage. If this individual is severely injured in an accident caused by an uninsured driver while driving one of their cars, and their state allows policy stacking, they might be able to combine the UM limits from all three vehicles. This could potentially allow them to recover up to $150,000 ($50,000 for each of the three vehicles) to cover their medical expenses and other damages, rather than being limited to just the $50,000 coverage for the single vehicle involved in the accident.

  This example illustrates policy stacking because the individual is combining the coverage limits from multiple vehicles listed on the same insurance policy to increase the total available compensation for a single incident.

• Example 2: Stacking Coverage from Separate Policies in a Household

  Consider a married couple who owns two separate cars, each insured with its own distinct auto insurance policy from different providers. Both policies include $100,000 in underinsured motorist (UIM) coverage. If one spouse is seriously injured by a driver whose insurance only covers $50,000, and the injured spouse's damages exceed that amount, they might be able to "stack" the UIM coverage from *both* their individual policies. Depending on state law, this could potentially allow them to recover up to $200,000 ($100,000 from each policy) to cover their remaining damages that the at-fault driver's policy could not.

  This demonstrates policy stacking by combining coverage limits from two entirely separate insurance policies held by members of the same household to maximize recovery for a single accident.

• Example 3: Stacking in a Commercial Fleet Context

  A small plumbing business owns a fleet of four service vans, all insured under a commercial auto policy. Each van has $75,000 in uninsured motorist (UM) coverage. If one of their employees is driving a company van and is severely injured by an uninsured driver, and the state permits stacking, the business might be able to stack the UM coverage from all four vans. This could make up to $300,000 ($75,000 for each of the four vans) available to cover the employee's extensive medical bills, lost wages, and other damages, significantly more than the $75,000 limit for a single vehicle.

  This example shows policy stacking in a business context, where the coverage limits from multiple vehicles within a commercial fleet policy are combined to provide greater protection for an employee injured in an accident.