Insurance "stacking": All you need to know

Insurance stacking: All you need to know

As you probably know, automobile insurance contracts contain maximum limits of coverage. If a driver crashes into the rear of another car and injures someone, then the at-fault driver can be sued and his insurance company will pay the judgment. However, regardless of the amount of the verdict, the insurance company only has to pay its maximum limit of per person coverage, as stated in the policy.

car accident


The at-fault driver then has an excess judgment against them for the amount over the maximum limit.  But very rarely does anyone have significant personal assets to pay such a judgment. Furthermore, most excess judgment verdicts can be eliminated in bankruptcy court. We have represented many people with crippling injuries, and hundreds of thousands of dollars in medical bills alone. Often, the victims can only collect $25,000 or $50,000 because that is all the insurance the person who caused the accident has, and there are no other reachable assets.

People can protect themselves from this problem by buying higher limits on their own automobile insurance policy. All automobile insurance policies in Virginia are required to include something called “underinsured motorist” coverage. Basically, this coverage provides that if you are in an accident and the defendant (the at-fault driver) has inadequate insurance coverage limits, say $25,000, but you as the injured person have an insurance policy with a higher coverage limit, say $100,000, then your insurance policy will pay the difference. In this case example, your company would pay $75,000, in addition to the $25,000 paid by the at-fault driver’s insurance company, assuming that the injuries and liability are sufficient to warrant that much.

man crying after an acciddent

Before the Virginia Farm Bureau v. Williams case, which was brought to the Supreme Court, it was believed that the law dictated that the injured person’s insurance carrier would only have to pay insurance on the car involved in the accident. Since that case, the Virginia Supreme Court decided that in some circumstances, the injured person’s insurance company might have to cover separately for each car on the policy.

After all, look at the declarations page. The insurance company with multiple cars on a policy usually charges three separate premiums for underinsured motorist coverage, so why shouldn’t there be three separate coverages which can be added up or “stacked”? If the premium that covers one car cannot cover the damages from the accident, why not use the insurance from the additional cars on the policy, which would better help the treatment and recovery of an injured victim and their vehicle?

The analysis is quite complicated, and the case applies to Virginia insurance contracts only. Other states have different rules. Lawyers disagree on the circumstances when this kind of stacking is allowed and when it is not. However, if you are seriously injured by the fault of another driver and have insurance of your own, you owe it to yourself to seek the services of an attorney and ask whether this case might apply to your situation.

If you or a loved one have been hurt in an accident through no fault of your own, call Allen & Allen today for a free consultation at 866-388-1307.