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    What You Need to Know About Automobile Insurance

    While it is extremely tempting to click on the low-price auto insurance on-line, it’s important to understand what goes into an auto insurance policy and what costs are based on. You may be surprised to learn that those low rates are the result of very thin coverage—something you don’t want to find out after you purchase a policy.

    The purpose of auto Insurance is to serve as a safeguard against financial hardship in the event of an auto accident. It is intended to help pay for damages if your vehicle is damaged, starts on fire or is stolen. Every state, with the exception of New Hampshire, requires drivers to carry liability insurance. 

    Types of Coverage 

    Basic automobile insurance policy contains the following six types of coverage:

    1) Bodily Injury Liability and Property Damage Liability

    Liability Insurance covers the costs of damage that you may do to others, including property damage and bodily harm. It also covers legal fees if you were the driver who caused the accident. 

    Property Damage Liability coverage compensates to replace or repair property that you destroy with your vehicle. Things like other vehicles, fences, buildings, and other items.

    Bodily Injury coverage compensates for medical bills and lost wages. It also pays for pain and suffering damages up to your policy limits.

    2) Collision Coverage

    Pays to repair your own vehicle after an accident. Coverage applies after your deductible is met.

    3) Comprehensive Coverage

    Pays for damages to your car that were not caused by an accident such as a fire, theft, vandalism, natural disasters, hitting an animal, or other unexpected event. Glass coverage is also covered under this portion of the policy. Coverage applies after your deductible is met.

    4) Medical Payments

    Medical payments coverage compensates for medical expenses for the driver and passengers as a result of an accident, regardless of who was at fault.

    5) Personal Injury Protection and No-Fault Coverage

    Personal Injury Protection (PIP) coverage pays for medical expenses and lost wages for the driver and passengers who are injured in an accident. PIP also covers funeral expenses and is required in 16 states.

    No-fault coverage pays for losses, regardless of who was at fault in the accident. 

    6) Uninsured/Underinsured Motorists Coverage

    Uninsured Motorist coverage pays for medical bills if you are hit by a driver who does not have automobile insurance or if you are involved in a hit-and -un accident. This coverage is required in many states.

    Underinsured Motorist coverage takes effect when you are hit by a driver who does not have enough automobile insurance to cover your medical bills. In this circumstance, the at-fault driver’s insurance would pay to its maximum and then UIM would cover the remainder up to your maximum.

    In some states, these coverages also address property damage.

    Add-Ons to Consider 

    There are several add-ons available to enhance your automobile coverage and your physical and financial safety:

    • Rental Reimbursement coverage pays for a rental car if your vehicle is lost or stolen.
    • Towing and labor coverage pays for fees as a result of breakdowns.
    • Gap coverage for new vehicles pays the difference between the actual cash value of the vehicle and the remainder left on a vehicle loan, if the vehicle is totaled.

    Choosing the right coverage for your vehicles is more complicating than clicking a button on a website. Live life protected with Campbell.

    These coverage insights are not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact a Campbell advisor for appropriate advice.