In parts one and two, we learned about liability and uninsured and under-insured coverages and how insurance companies can no longer “set-off” reduce the amount of your UM coverage.

What is “Anti-Stacking”?
Another change in the law stops insurance companies from using “anti-stacking” language when writing a policy. Prior to the new law, insurance companies could collect premiums for UM/UIM coverage on multiple policies covering multiple cars in the same household. However, they would not allow the policy holder to use these multiple coverages at the same time.

Example:
Andrew and Samantha were both driving on the interstate when Samantha rear-ended Andrew’s car because she was distracted while talking on her cell phone. Samantha was uninsured. As a result of the accident Andrew had medical expenses and lost wages totaling $250,000. In addition to his liability coverage, Andrew had purchased and paid premiums on three separate $100,000 UM/UIM policies for each of his three cars for a total of $300,000.

Conclusion Before January 1, 2008:
Andrew’s insurance policy contained anti-stacking language which allowed the insurance company to limit Andrew’s coverage to only $100,000 of UM/UIM benefits on one car policy despite the fact that Andrew paid for UM coverage on 3 different vehicles, paying premiums for $300,000. His coverage was $150,000 short.

Conclusion After January 1, 2008:
Under the law change, Andrew was able to combine or “stack” his three policies for a total of $300,000 which was more than enough to cover his $250,000 in medical expenses and lost wages.

To be continued. Next up: Can “Set-off” and “Anti-Stacking Be Used Together?