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Stacking Insurance Policies

Posted on: December 28, 2022

Chi Hung Nguyen
December 28, 2022

Stacking Insurance Policies

stacking insurance policy contracts

Auto insurance is typically the obvious insurance coverage that comes into play after a car accident or truck accident. But some people do not know that multiple insurance companies and policies can be involved to help cover the injuries and damages after an accident.

For example, there are umbrella and excess insurance providers. An excess insurer is an insurance provider that covers a risk already covered by another policy. It increases the insurance coverage limit amount under the original insurance policy. Like excess insurers, an umbrella insurer is an insurance provider that provides an insurance policy that fills in any gaps in coverage left by a primary insurance policy.

Understanding how multiple insurance policies can apply to your claim is important, because some excess insurers have a duty to drop down and provide insurance coverage. The excess and umbrella insurance provider may have to pay even if the primary insurance provider never paid any part of the insurance claim. This can be the case where the primary insurance provider became insolvent, or went out of business and does not have any money to pay a claim.

Layering on multiple insurance policies usually happens when an expensive vehicle, or commercial vehicle, such as truck used by a business to transport its products for sale, needs multiple insurance policies to cover the full value of the vehicle, its employees, the cargo the truck is carrying and more.

But having multiple insurance policies apply to a single accident goes beyond car accidents and truck accidents.

For example, there are environmental claims that may affect multiple insurance providers and policies – such as asbestos cases. According to the Environmental Protection Agency, asbestos is a type of insulation material that is used in auto parts, building materials, cement, electrical parts, cloth products and more. Over time, exposure can lead to inflammation, scars, lung disease and cancer. Still, like many environmental pollution problems, this can be hard to detect. A person who suffers from this kind of injury may not discover he or she is sick until years later. The time frame from the date the injury and exposure began, to the date it is discovered can be over months or years. This means that the insured person or business may have multiple insurance providers and policies over the years.

What is insurance stacking?

Insurance stacking is collecting multiple insurance policies for a single claim or loss. However, whether or not insurance stacking is allowed by the law depends on the state law that applies. Each state has its own unique laws, and a particular way the state’s courts apply those laws.

Even if the state laws that apply allow insurance stacking, the type of claim may prohibit insurance stacking under a particular statutory law.

For example, there are many states with uninsured and underinsured motorist laws that do not allow an injured claimant to stack insurance policies for one claim. But if the state whose laws apply allow insurance stacking, then the injured claimant may be able to recover under multiple insurance policies’ limits and get benefits from any of these policies.

Another hurtle that needs to be passed is the language of the insurance policy. Insurance policies are contracts. Many insurance policies covering auto accidents or environmental exposure claims have a definition of a covered “occurrence.” This occurrence usually must have happened during the policy period, basically when coverage is available. Under most auto policies, the car accident itself is the qualifying “occurrence.” But it is not always as clear cut.

To use the above example of asbestos, the occurrence may be the exposure. But, unless there is evidence that survived the potentially large amount of time that passed from the first exposure till the discovery of injury, it can be hard to pinpoint the exact moment the injury happened and show the insurance company that the occurrence happened during the covered policy period.

In these kinds of cases, the court has to decide how many policies will apply. Some courts have decided that the language that tries to exclude this kind of claim is too broad and unclear to be an enforceable contract. Put simply, the court decides which policies apply and whether or not the insurance company can use the wording in the insurance policy to deny an insurance claim.

Can a homeowner’s insurance policy be used in an auto accident?

Yes, depending on the conditions and facts of the claim. A homeowner’s insurance policy is an insurance policy that covers the insured person when there is damage to the home or certain assets in the home, like natural disasters or accidents at home. Whether or not a homeowner’s insurance policy can be used after a car accident or truck accident depends on the facts of the specific case and claim. It usually depends on the car accident happening at the same time as another occurrence that is covered under the homeowner’s insurance policy.

Whether an insurance policy covers a particular accident depends on the language of the insurance policy contract and the facts of the claim that triggered the policy. In many cases, the insurance policy contains a definitions section that outlines what certain words mean in terms of how the insurance policy works. Other words are typically given the meaning used in everyday life or as they are plainly known to mean, such as how the dictionary defines the words.

In one case in California, State Farm Mut. Auto. Ins. Co. v. Partridge, the injured claimant was a passenger in a car when he was accidentally shot by the insured driver whose gun went off on its own. It turned out that the insured driver had actually filed the trigger down so that it was very sensitive, and could go off very easily. While driving over a bumpy road and rough conditions, the driver’s gun went off on its own causing the injury. This case uniquely combined both the homeowner’s insurance policy because the gun was the driver’s property and cause of the injury as well as the driving on the rough ground which set the gun off.

Another case in Louisiana, Paxton v. Sanderson, also had to do with an accident involving homeowner’s insurance. In this case, a teenager was driving a three-wheeled all-terrain vehicle. The vehicle belonged to her boyfriend’s parents. Although the parents owned the vehicle, they did not own the land where the accident occurred. The teenage girl’s mom filed an insurance claim with the boyfriend’s homeowner’s insurance, and then filed a lawsuit against both the boyfriend’s parents and their insurance company. The homeowner’s insurance policy said that it excluded coverage for claims involving motor vehicles owned by the insured policyholders, and refused to provide insurance coverage for the teenage girl’s injuries and damages. When the case came before the court, and then appellate courts, the courts looked at the definition of a motor vehicle and the wording of the insurance exclusion. Basically, the courts looked at what the terms of the policy said, and how they defined terms like motor vehicles. Ultimately, it was decided that the insurance policy exclusion clearly excluded this kind of accident.

However, under similar facts involving an ATV accident, courts have found that the insurance policy is not clear, or is legally ambiguous, because of how the homeowner’s policy insurance language is worded and how it defined certain words.

This is why it is important to find personal injury lawyers that can look at the insurance policies that come into play for your particular claim. Lawyers are able to conduct research into which parties are responsible, including how many the insurance companies may be involved and which policies are still available. Lawyers also investigate the claim by looking into official reports like police reports, witness statements, video surveillance as well as medical records to see how much a particular claim is worth. Contact a lawyer to see if you have a potential claim for your injuries.

A knowledgeable personal injury attorney can help analyze the language of your insurance policy and figure out whether or not you are covered, and if you can recover under the laws of your state.

Contact an experienced personal injury lawyer 

Without experience in the insurance industry or legal experience, understanding which factors or evidence can help or hurt your case can be difficult to understand.

Are you trying to secure your financial recovery with the help of experienced attorneys? If so, we can help.

The Pusch & Nguyen Law Firm has helped countless Texans handle their insurance disputes. Our experienced trial lawyers have gone up against some of the biggest names in the insurance industry while successfully bringing home payouts for clients. Our successful reputation speaks for itself, and with offices in both Houston and San Antonio, we are well equipped to assist Texans who are in dire need of our services. Register online for a free case evaluation or call us today at 713-524-8139 (Houston) or 210-702-3000 to schedule an appointment with a member of our team.


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