Stacking is Here

A law passed in the 2017 legislative session requiring insurers writing policies in Maryland to offer “stacking” of underinsured (UIM) automobile insurance coverage. This law went into effect in July 2018, but it hasn’t gotten much, if any, publicity.

What’s Stacking, and Why Is It Important?

Before we get to that, let’s take a quick step back for a brief overview of insurance coverage in general in the auto accident context. If you are injured in a car crash by a negligent driver, their insurance coverage is responsible for covering your damages, to include your personal injuries and other harms and losses. The state mandates that a driver have at least $30,000 in coverage for instances like this, though a person can purchase much, much more (to include personal liability umbrella policies, also known as PLUPs). Unfortunately, many drivers in Maryland carry only the state minimum. In that scenario, if your damages- typically your medical bills, lost wages, and harms and losses (sometimes termed pain and suffering) exceed the $30,000 afforded by the at-fault driver’s $30,000 policy, you would then turn to your own insurance policy’s coverage for Underinsured Motorist (UIM) protection, a protection you pay for every time you pay your premium.

Currently, if your UIM policy matches the policy of the at-fault driver (for instance, if you have a $30,000 UIM policy and they have a $30,000, or if you have a $50,000 policy and they have a $50,000, and so on and so forth up the ladder), then you are not afforded any further coverage for your injuries and damages. Also, currently, if you have a larger policy than the at-fault driver, you are afforded only the difference between those coverages. So, for example, if you have a $50,000 UIM policy but the at-fault driver had $30,000 in coverage, you would be entitled to the $30,000 from the at-fault driver and then $20,000 more from your own carrier under UIM coverage (this presumes your damages warrant these amounts, of course). If you had a $100,000 policy of UIM and the at-fault driver had a $30,000 policy, after you received the $30,000 policy limits from the at-fault driver’s carrier, you would then turn to your own UIM coverage and could potentially receive $70,000, that is, the difference between the two policies.

As of July 2018, however, insurers writing policies in Maryland have to offer stacking UIM as an option to their insureds. This is critical because you are now able to drastically increase your coverage and protection in instances where an at-fault driver causes you or any loved one in your vehicle injuries and other damages.

How Will Stacking Work

Taking our first example above, let’s assume the at-fault driver has $30,000 in coverage and you have $30,000 in UIM benefits. If you do not opt in to stacking, you will not be afforded any more coverage that the at-fault driver has paid for. If, however, you opt into the stacking being offered after July 2018, you will be afforded a total of $60,000 of coverage instead of $30,000. Extrapolating further, if the at-fault had $30,000 in coverage but you have $100,000 in UIM, without stacking you’d be entitled to $70,000 in additional coverage if you proved your case was worth more than the $30,000. With stacking, you would have $130,000 in total coverage available ($30,000 plus the $100,000 in UIM). With stacking, therefore, you’d simply add the amount of the at-fault driver’s policy to the total of your UIM policy to determine the maximum coverage available.

It’s bad enough when someone who is careless causes you harm, but it’s even worse after the fact when you find out that they had limited insurance proceeds to cover your damages. It’s not always possible, no matter how carefully you drive, to avoid another’s negligence. But you can protect against their having opted for a limited insurance policy ahead of time by choosing to protect yourself with adequate insurance in case this happens. Having good UM/UIM coverage and opting in to the stacking option is one way to do this.

What Should I Do?

Call your agent today to speak with him/her to discuss the possibility of opting IN to the stacking provision being offered as of July 2018. While you’re doing so, take the opportunity to review your coverages. For instance, consider adding Personal Injury Protection (PIP) if you have previously waived it. This is another very inexpensive way to better protect yourself in the event of a crash and related injuries that lead to medical bills and/or lost earnings (With PIP, you and your passengers are afforded limited coverage even if you were at-fault. PIP limits are typically $2,500, $5,000 or $10,000.)

Please know, however, that the insurance companies fought this law hard and didn’t want to have to offer this stacking protection in Maryland. Why would an insurance company not want to have another product to sell and make more money, you may ask? Well, you can be assured that they did not believe it was cost-effective for them. Therefore, it’s even more important that you’re proactive about protecting yourself; because the insurance companies do not view this product as being a revenue driver, they will not be the ones advertising this change or incentivizing their agents to make sales of stacking additions to existing policies.

If you’d like to discuss this matter or these issues in greater detail, please feel free to give me a call or email me. Likewise, if you’d like to speak with an insurance agent but either don’t have one or would like to speak with a new one, please contact me, and I’d be happy to make a recommendation or two.