Purchasing insurance coverage for your vehicle can be a daunting task. So many different terms and numbers are tossed about until you settle on a coverage package that you hope is best for you and your family.
One of those coverages is uninsured/underinsured motorist coverage, and it may be one of the most important types of insurance coverages you can have.
What Is Uninsured/Underinsured Motorist Coverage?
Uninsured/Underinsured Motorist (UM) Coverage is unique because it’s there to pay you and your loved ones, or anyone that’s occupying your vehicle, directly for damages or losses you sustain as a result of injuries from a car accident. Unlike no fault or PIP, benefits that are paid directly to your medical providers or that only compensate you for a certain portion of your lost wages, UM coverage is there to pay you in one of two situations.
The first is if you’re hit by a driver who has no insurance whatsoever. That driver is considered uninsured, and your UM coverage will actually act as insurance for that driver.
The other case is if you’re seriously injured in an accident, and the person who hit you doesn’t have enough insurance. In that case, they are considered underinsured, and again, your UM coverage would act as additional insurance for that individual.
Purchasing The Right UM Coverage
Now, here in Florida, all auto policies that are sold with a bodily injury portion, which is unfortunately not required here in the state of Florida. However, most drivers do purchase that coverage; and, if you do, you have to be offered uninsured/underinsured coverage.
Now, there are some states that offer those two coverages as something separate. You can purchase uninsured but not underinsured, or vice verse. However, in Florida, we’ve made it easy. Under our laws, uninsured or underinsured coverage is the same type. You have to reject it by signing a very specific document that advises you of your rights and explains to you all the reasons why you shouldn’t reject it and should, in fact, purchase it.
But, it’s offered in two forms, stacking and non-stacking coverage. And so, stacking and non-stacking UM coverage, although they provide similar sounding benefits, they’re very, very different. You need to be careful when you decide which one you want to accept or reject.
Stacking Insurance Coverage
First, we’re gonna talk about stacking coverage. In Florida, that’s the way the coverage is sold as a default. If you don’t reject it or modify it, you buy stacking UM coverage. So, what does stacking UM coverage mean?
As the name implies, one of the most obvious benefits is that you can stack, or add, the coverage in cases where you own more than one vehicle.
Let’s say you have a family and you have two or three vehicles. If you want, you can purchase UM coverage by stacking on three different vehicles. So, you buy what we call a 10/20 policy, and you buy it on three vehicles.
Well if you or a family member are involved in an accident, then that coverage would stack by the number of vehicles you purchase the coverage for. So, 10/20 plus 10/20 plus 10/20, would give you $30,000/$60,000 in coverage.
Only applies to family members.
In most cases though, that stacking coverage only benefits you or a resident relative, so if your kids live with you, or your wife, spouse, husband; any family members that live in the household are usually covered. But other people that are riding your car, they don’t get the benefit of that stacking coverage. So really, it’s a decision you make to protect your family.
Applies to every vehicle in the household.
The other, less obvious, benefit to stacking coverage, is that it follows you and your family through every vehicle that you own.
So let’s say you have one vehicle that’s owned and insured by Company A, and you buy stacking UM coverage on that one vehicle. But let’s say you have two other vehicles that you insured with Company B, and you don’t buy stacking UM coverage on those vehicles. In fact, you reject it outright.
Well if that first vehicle has stacking coverage, then every vehicle in your household is entitled to that underinsured or uninsured coverage. That ensures that if you or your family are in an accident in a vehicle that you didn’t purchase UM coverage on you will still be protected as long as one policy in your household has stacking coverage.
Generally speaking, stacking coverage is more expensive than non-stacking coverage. Another consideration is that if you purchase stacking coverage on one vehicle and reject UM coverage on other vehicles, only your family members will be protected when riding in those other vehicles. If your friend, neighbor, or someone who is not related to you is riding in a vehicle without UM coverage, they will not get the same stacking coverage protection if you are involved in an accident.
Non-Stacking Insurance Coverage
Now, the other type of coverage we have in Florida is what’s called non-stacking coverage. Just like the name implies, non-stacking means that you can’t add policies together. So, if you have two vehicles and buy non-stacking UM coverage on both, you don’t get to add the coverages. You just get the coverage for whatever vehicle you’re riding in.
Less expensive, fewer benefits.
Generally, non-stacking coverage is going to be less expensive than stacking coverage, so it may be offered to you as a way to save money on your policy. But you wanna think long and hard about whether or not that’s the right choice for you and your family or the way that you drive those vehicles. Because although it may save you some money on your monthly, six month or annual premiums, overall those savings won’t be all that significant, and you are potentially giving up some very important coverages.
Does Not Cover Other Vehicles.
The other risk is that if you own multiple vehicles but only purchase non-stacking UM coverage on one of those vehicles, you will not get UM coverage on the other vehicles. So, if you get into a car accident in a vehicle which doesn’t have UM coverage, the non-stacking coverage will not protect you. However, that doesn’t apply if you are in a car accident in someone else’s vehicle, ie. if you’re a passenger. If you have UM coverage on a vehicle, it will still apply to you in that scenario.
But for families that have more than one vehicle, it’s important to make sure that you’re not exposing yourself to one of those horrible situations where the coverage won’t apply.
Which one is right for me?
Now that you know the basic differences between stacking and non-stacking coverage, the obvious question is – “Which one is right for me?”
We recommend that everyone take a look at the number of vehicles they have and how they use those vehicles. You need to look at the options to buy:
– stacking coverage on one vehicle but not the others
– non-stacking coverage on each vehicle
– stacking coverage on multiple vehicles
You could purchase stacking coverage of a lower amount but for multiple vehicles, because you know that those numbers will add together. Those are all considerations that should be discussed with an insurance agent when you’re looking at premiums and trying to decide what coverage is best for you and your family.
At the end of the day though, we always recommend that you purchase UM coverage, and you purchase as much as you can possibly afford. The best type of insurance is the type you have but never need.
But if you or a loved one are involved in an accident, uninsured or underinsured motorist coverage is the only guarantee that there will be insurance that you can go after if you’re injured. Remember, as we discussed earlier, in the state of Florida, drivers do not have to purchase bodily injury insurance, and they may not have sufficient coverage to protect you or your family if you’re injured.
If you or a loved one have been involved in an accident and you have questions about what your rights are under Florida law, give us a call today for a free consultation. At the same time, if you just have questions about your auto policy and you wanna make sure that you purchased the right insurance, or if the insurance you have will cover you and your family, give us a call as well. We’d love to discuss your policy with you, at no charge. You can call us today for a free, no-obligation consultation, at 1-800-438-3606.
View related video here: Uninsured and Underinsured motorist coverage
View related slide deck here: Uninsured And Underinsured Motorist Insurance Coverage