In an earlier post, we talked about how “non-stacking” uninsured and underinsured motorist coverage means you have less coverage than you think. Unfortunately, this same “non-stacking” rule applies even when there are multiple UM/UIM policies — with some additional quirks.

Let’s use an example.

You were the passenger in a crash caused by an uninsured driver. The driver of your car has a $30,000 UM policy. You also have a $15,000 UM policy on your own auto insurance.

A rational person would expect that the total insurance money would be the sum of the two policies — in other words, that your $15,000 and their $30,000 policy would equal $45,000 in total coverage (this is “stacking”).
But under the “non-stacking” rule, the largest policy sets the total coverage limits. In other words, you can’t get more than $30,000.

Now you’re asking: But what about my policy? Is that $15,000 just wasted? Unfortunately, in this particular case, it’s not going to do you any good. But the insurance companies are glad for it.

What happens is that the two insurance companies, combined, only have to pay up to the largest policy limits of $30,000. But each company only has to pay a pro rata portion, based on the size of their policy limits.

In this case, the driver’s UM coverage is twice as large as yours. That means their insurance would be exposed to pay twice as much of the policy limits as yours. So the driver’s policy pays $20,000, and your policy pays $10,000, and the total is a frustrating $30,000.

Of course, for a non-policy-limits case, there’s no requirement that Company X pay exactly twice as much as Company Y. So it can be a real headache to deal with this situation. If the adjusters aren’t coordinating between themselves, sometimes you can divide-and-conquer and get a better outcome. But there’s no guarantees.

Still, even though UM/UIM is not as effective as it should be, it is the most important coverage you can buy to protect your family. After all, if your driver didn’t have any coverage, you’d be extremely grateful for your $15,000.

But it’s still best to have as much UM/UIM as you can afford.