Arranged vs Unarranged Car Insurance: Which is Best for You?

Uninsured and underinsured motorist coverage helps pay your costs if you’re ever involved in a car accident with someone who has little to no insurance. Having auto insurance in place allows you to combine the coverage limits of multiple policies or multiple vehicles to get more coverage in the event you are injured in an accident with an underinsured motorist.

Stacked insurance is primarily offered with coverage for uninsured or underinsured motorists. Some states prohibit or limit the accumulation of insurance coverage, and even if it is allowed in your state, your insurer may not offer it.

Learn more about arranged versus non-arranged car insurance so you can make the most of your coverage options.

Arranged vs unarranged car insurance

Uninsured and underinsured motorist insurance coverage is arranged or not arranged. Stacked coverage combines the coverage limits of multiple policies or vehicles. With non-arranged insurance, you will only be covered up to the amount declared on your insurance policy.

How does arranged car insurance work?

Uninsured and underinsured motorist coverage (UM or UIM, respectively) provides bodily injury coverage for medical bills and property damage coverage to repair or replace your vehicle. To use UIM or UM coverage, the uninsured or underinsured driver must be at fault. This coverage also applies if you are the victim of a hit and run accident.

Uninsured motorist coverage helps cover accidents where the other at-fault driver does not have insurance. An underinsured motorist applies if the other driver does not have enough insurance to cover your medical expenses. For example, the other driver may only have state minimum liability coverage with relatively low limits.

However, stacked coverage only applies to bodily injury coverage on your uninsured and underinsured motorist insurance policy, not property damage. So you may be able to combine coverage limits to pay for medical bills, but not repairs or replacement of your vehicle in an accident.

Your cover can be ‘stacked’ in one of two ways:

  • Vertical arrangement: Combines the coverage of two or more vehicles under the same policy. So if you have three cars on one policy, each with $50,000 of UM/UIM bodily injury coverage, you can get up to $150,000 in coverage by stacking your coverage.

  • Horizontal arrangement: Combines the coverage of multiple auto insurance policies from the same insurance company within one household. For example, if you have $50,000 of coverage under your UM/UIM policy and your spouse also has $50,000 of coverage, you can file claims on both policies for total coverage up to $100,000.

Typically, accumulated insurance will cost more than non-accumulated insurance because it provides higher insurance limits.

Depending on your state, you may not be able to get stacked insurance or you may be limited in the type of stacked insurance you can use. Stacking of insurance is allowed in 32 US states, and 10 of those states only allow horizontal stacking of policies.

Here’s a list of states that allow insurance stacking:

How does messy car insurance work?

Unbundled auto insurance is the standard UM or UIM coverage you carry on one vehicle. The cover is not combined with other insurances you have for other vehicles. You choose a certain level of coverage, and if you have an accident and you’re not at fault, your insurer pays out the amount you’re covered for.

For example, if you have $50,000 of UM/UIM personal injury coverage, your insurance company will pay up to $50,000 of your medical bills if you are in an accident with someone who is uninsured or underinsured.

Bodily injury claims can include medical expenses, pain and suffering, lost wages and even funeral expenses, so the costs can be over $50,000, but non-arranged insurance will only pay up to the threshold amount.

The advantage of non-arranged car insurance over an arranged policy is the cheaper premium. When you stack policies, you have to pay more for higher coverage amounts.

What the two car insurance options have in common

Auto insurance policies, both stacked and unstacked, are similar in that they offer UM or UIM coverage for bodily injury. According to a 2021 Insurance Research Council (IRC) study, one in eight U.S. drivers is uninsured, so having any type of UM/UIM insurance coverage is important, whether it’s arranged or not.

3 important differences between arranged and non-arranged car insurance

The differences between arranged and non-arranged car insurance mainly consist of the amount of coverage, price and availability.

1. Coverage

Stacked insurance offers more coverage because it combines the coverage you have for multiple cars or multiple policies. So if you have two cars on one policy, each with $50,000 in coverage, stacking insurance on both cars will give you $100,000 in coverage. The unstacked insurance will only pay up to the $50,000 coverage limit for your car.

2. Costs

There are many factors that affect car insurance rates. Unstacked insurance is usually cheaper than stacked insurance because you get less coverage. Although you could save money on car insurance premiums with uninsured coverage, you may be responsible for paying out-of-pocket for accident-related expenses beyond what your insurance will cover.

3. National availability

Unstacked insurance is available anywhere in the US. On the other hand, stacked insurance is only available in 32 states, and 10 of those only allow horizontal stacking when combining two or more insurance policies. Also, your insurer may not provide stack insurance even if it is allowed in your state.

Which car insurance option to choose?

If you own multiple vehicles or other drivers in your household have auto insurance policies, then you may want the added protection that stacking your insurance can provide.

When choosing between stacked and unstacked insurance, you should first make sure that stacking is allowed in the state you live in and the insurance company you use. If not, you really have no choice but to go for a messy car insurance policy.

There may also be certain restrictions set in the states that allow stacking. For example, in Alabama, you are limited to stacking a maximum of three vehicles on one insurance policy. So it’s a good idea to check your state laws before getting quotes for a stacked insurance policy.

Since stacked insurance is only available with UM/UIM coverage, you may want to consider the cost of adding additional coverage to your auto insurance if you don’t already have it. While most states require liability auto insurance, UM/UIM coverage is only required for drivers in 14 states.

Frequently Asked Questions

Is arranged or unarranged car insurance better?

Whether arranged or unarranged car insurance coverage is better depends on what you think is better. Stacked car insurance can offer a higher level of cover, but unstacked insurance is cheaper.

Should I have car insurance sorted?

No, you are not required to have car insurance in order. You may not live in a state that offers it, or you may have an insurance provider that offers tiered insurance.

Do I get more protection from arranged or non-arranged car insurance?

Stacked auto insurance provides more protection against high medical costs after an accident with an uninsured driver because it combines coverage on multiple vehicles or policies.

Bottom row

The cost of medical bills and lost time after an accident can be high, especially if the at-fault driver does not have insurance. While uninsured and underinsured motorist insurance can help you cover these costs, accumulating insurance coverage from multiple vehicles or multiple policies can provide additional protection to ensure that your accident medical bills are paid.

To find coverage that fits you and your family’s needs, check out our list of the best auto insurance companies.

This article Arranged vs Unarranged Car Insurance: Which is Best for You? originally appeared on FinanceBuzz.

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