Uninsured Motorist Coverage–To Stack or Not to Stack

Editor’s Note: The majority of this article contains copyrighted information, which has been reprinted through the kind permission of the Florida Association of Insurance Agents. Only the first eight paragraphs of introduction are of original content. You can visit the Florida Association of Insurance Agents’ website at: www.faia.com

Who has never asked, “Why should I carry stacked uninsured motorist (UM) coverage on a single car on my policy?  What is there to stack upon?”   OK, even if you haven’t asked the question, you should consider asking it now.  Ask the question before your policy comes up for renewal.  Even with a single car insured on your policy, there is a coverage difference between the stacked and non-stacked UM forms which can affect whether you or your family members will be able to collect UM at all.  Florida statute 627.727(9) addresses UM coverage and the stacking/non-stacking issue. The statute is et forth at section 627.727 of Florida Statutes.

Most insurance companies do offer the non-stacked coverage, and far too often, the policy holder does not get a full understanding of the differences between the two forms, other than the cost increase for the stacking version of UM coverage.  Remember too, the statute is clear that if the policy holder does not sign an election/rejection form at the inception of the policy, the UM coverage is issued at a limit equal to the bodily injury limits on a stacked basis.

Below is a breakdown of how stacked and non-stacked uninsured motorist policies are similar and how they are different. When making the decision as to whether or not you wish to “stack” your policy, it is important to understand those similarities and differences. Before getting into what makes one form of coverage different from the other, we will quickly discuss a few of the pros and cons which derive from each choice.

DECIDING WHETHER STACKED OR UNSTACKED UM COVERAGE IS BEST FOR YOU

Florida is one of thirty-two states which, as of May, 2020, allowed for the stacking of uninsured motorist coverage. As explained in more detail below, the main advantage of picking a “stacked” form of coverage is that you receive increased protections and higher possible payouts. The downside of stacking your coverage is that you will bear higher premiums. As with all forms of insurance, what is best for a particular individual is going to depend on the specifics of their situation. 

SIMILARITIES AND DIFFERENCES BETWEEN STACKED AND UNSTACKED UM COVERAGE

Coverage Similarities
Before looking at the differences in stacked and non-stacked UM, let’s look at the similarities.

• “An insured” for UM includes the person named, the resident spouse, and related persons who are reside in the household, such as children.  (Persons occupying “your covered auto” are also “an insured” for UM coverage.)
• Both forms allow an insured to collect UM coverage while occupying an auto that they own and insure.
• Both forms allow an insured to collect while they are occupying an auto not  owned by them. For example, a resident spouse rents a Hertz car or borrows a friend’s car and is injured by an uninsured motorist.
• Both forms respond out of state.
• Both forms respond if an insured is on a business errand or in a vehicle owned by their employer.
• Both forms respond for an insured who is occupying a non-owned motorcycle
• Both forms allow an insured to collect UM benefits if they are struck as a pedestrian by an uninsured motorist.

Thus, both the stacked and the non-stacked UM forms provide coverage which is “portable” meaning it follows a policy holder into non-owned vehicles and as a pedestrian.

The stacking provision, in its simplest and most basic form, states that a policy holder can take the UM available on each car which is owned and insured and “stack” it together to be used anywhere.  On the other hand, non-stacking is much like “what you see is what you get,” meaning the UM limit you see on the declarations page is what you get, no matter how many cars you own and insure.

Coverage Differences
Besides a pure dollar difference, there is a significant coverage difference between the two forms which could affect whether you or your family members can collect under the UM provision of the policy.  At times the stacked form will respond for a claim whereas, the non-stacked form will not.  The non-stacked form has an exclusion stating that the insured can’t collect UM while occupying a vehicle owned by the insured, but not covered for UM under the policy.
A typical non-stacked UM form has an exclusion that reads something like this:
A. We do not provide Uninsured Motorists Coverage for “bodily injury” sustained:
1. By an “insured” while “occupying” any motor vehicle owned by that “insured” which is not insured for this coverage under this policy. This includes a trailer of any type used with that vehicle.

When Stacked UM Responds but Non-stacked Coverage Does Not

• The policy holder obtains a second vehicle and does not call to report the vehicle within the allowable reporting period of 14 to 30 days after purchase (depending on the particular form).  Two months later, he or she is hurt while occupying that new vehicle, injured by an uninsured motorist.  Stacked coverage responds while the non-stacked does not.
• The policy holder owns a clunker, a vehicle that is not licensed and is used a few times a year to haul material to the county dump a few blocks away.   The policy holder decides to take advantage of the Cash for Clunkers program, and on the way to the dealership, a collision occurs with an uninsured motorist, and the policy holder is injured. Stacked coverage responds while the non-stacked form does not.
• The policy holder is a “snowbird” who insures one vehicle in Florida under non-stacked UM and owns another vehicle up north.  He is in the northern vehicle and is injured by an uninsured motorist.  The Florida policy with stacked coverage responds while non-stacked does not.
• The policy holder owns a motorcycle, insures it separately under a motorcycle policy and has rejected UM under the motorcycle policy due to the high cost.  In addition, the policy holder owns a car insured on a personal auto policy.  While on the motorcycle he is injured by an uninsured motorist.  With stacked UM on the auto policy coverage responds for the injury sustained while occupying the motorcycle; non-stacked UM would not respond.

The original question was, “Why stack UM on a single car risk?”  Hopefully this article has shown how, even with one car on a policy, the stacked UM form provides broader coverage than the non-stacked form.  Each of the examples above shows how coverage is broader under the stacked form.  To say that stacked UM benefits only those with more than one car is not correct.

Back to the Future–Answering the Original Question

While it is true that many people may never face a situation in which stacked UM on a single car policy would respond and non-stacked would not.  However, it’s critical to understand the coverage differences in the two forms.   Stacked benefits always give the insured the benefit of the most, and broadest, uninsured motorist coverage.
ANSWER:  There are two major differences in the stacked and non-stacked UM forms.  One relates directly to how much money the client can collect.  The other difference is whether the form responds or not.  The stacked UM form will respond at times when the non-stacked UM form does not.  Even on a policy with a single vehicle being insured, there is a difference in UM coverage.

For more information on this topic and others, please visit the INSURANCE LIBRARY from the Florida Department of Financial Services: CLICK HERE. You will be given a menu with a wide range of topics as well as a link to a series of “consumer guides” which can be helpful.