The Colorado Division of Insurance told us that there are no Colorado insurance laws which require an insurer to stack Bodily Injury Liability or disallow offsets. We are not aware though of any car insurance carrier that will stack Bodily Injury Liability limits other than Uninsured Motorist Bodily Injury limits.
What may happen with Bodily Injury Liability limits is if there is more than one policy which could apply to a loss, the insurers involved will determine if one policy is excess or if both apply simultaneously. If the latter, then the car insurance companies will pay on pro-rata based on the policy limits, but no more than the maximum value on the policy with greater coverage.
So if there are multiple car insurance policies possibly responsible for the damage or injuries sustained in an accident then more than one policy may be responsible for paying out on claim. One policy will be primary and the other(s) will pay in excess; however the total payout will not be higher than the limits of the policy with the most coverage. This where Liability limits are used as excess is different then stacked Uninsured Motorist (UM) coverage where the limit amounts are added together.
When there may be two policies, one primary one and one is excess is where a driver with their own policy is in an accident in another person's car and the driver has higher Liability limits then the car owner. The car owner's policy would be primary and if their limits were exceeded then the driver's Liability policies may be sought after for claims.
It may be easier to understand with a real life example. So say Adam who has Liability coverages of 25/50/25 is driving his friend Steve's car that has minimum Liability limits of 15/30/5 and causes an accident where the other party has injuries resulting in medical bills of $30,000 and property damage which costs $28,000. Steve's coverage as the car owner would be primary because he was the car owner and insurance follows the vehicle. However because the victim's damages are so expensive Steve's limits are exceeded so now Adam, who was the at-fault driver, may have his Liability coverages used as excess.
The person hit can get $15,000 from Steve's Bodily Injury Liability coverage and then claim another $10,000 from Adam's Bodily Injury Liability since Adam's limits are $10,000 higher than Steve's. The two Liability policy limits are not added together, like stacked coverage, but the amount higher that Adam's limits are compare to Steve's can be used. This would leave the victim with $5000 of medical expenses not paid by either policy.
With the property damage portion of the claim the victim would seek $5000 from Steve's policy and $20,000 from Adam's Property Damage Liability coverage. This leaves the victim with $3000 worth of property damage costs that were not covered by either policy. It is likely then the person hit could sue both the driver and car owner for the $8000, $5000 of medical expenses and $3000 of property damage costs, which was not covered by either policy since the Liability limits with each were reached already.
If your agent is not able to explain to you about stacked and excess insurance or fulfill your car insurance needs, contact a CarInsurance.com agent. Our agents can explain not only insurance terms and explain claim procedures but also tell you how they can get you low cost car insurance.