Question

Auto Insurance for Dwight Fox Dwight Fox is a 40-year-old loan officer at a large regional bank; he has a 16-year-old son. He has decided to use his annual bonus as a down payment on a new car. One Saturday afternoon he visits Unique Motors and buys a new car for $32,000. To obtain insurance on the car, Dwight calls his agent, Carla Dawson, who represents Brown’s Insurance Company, and explains his auto insurance needs. Carla says that she’ll investigate the various options for him. Three days later, Dwight and carla get together to review his coverage options. carla offers several proposals, including various combinations of the following coverages: (a) basic automobile liability insurance, (b) uninsured motorist’s coverage, (c) automobile medical payments insurance, (d) automobile collision insurance, and (e) comprehensive automobile insurance.

Critical Thinking Questions 1. Describe the key features of these insurance coverages. 2. Are there any limitations on these coverages? Explain. 3. Indicate the persons who would be protected under each type of coverage. 4. What kind of insurance coverages would you recommend that Dwight purchase? Explain your recommendation.

Answer 1

Ponderosa Inc.
Sr.No.	Particulars
a)	Automobile Liability Insurance - This type of Insurance only covers damages to third party and their vehicles. There is no risk coverage to the driver or driver's vehicle - Limitation - no risk cover to driver or driver's vehicle. - Persons covered - Only third party
b)	Unisured Motorist's coverage - This type of coverage helps the policy holder to pay for its medical bills or car repair bills when the other person does not have automobile liability insurance and he is found to be at fault in an accident. Limitation - This type of insurance cover can be exercised only when the other person is at fault. - Persons covered - Only Insured
c)	Automobile Medical Coverage Insurance - This type of insurance coverage provides cover for medical bills of insured and co-passanger who are accident victims, irrespective of person in fault. Limitation - This type of risk cover does not provide cover for repair or replacement of vehicle and also does not provide cover to third party - Persons covered - Insured and co-passengers
d)	Collision Insurance - This insurance covers the cost of repairs or replacement of vehicle when the vehicle is damaged in an accident. The accident may be with another vehicle or object. Limitation - This type of risk cover does not provide cover for medical bills of passangers/co-passangers or third party and also damages caused through vandalism, fire etc. Persons covered - No person is covered in this type of insurance
e)	Comprehensive Insurance - This type of insurance like collision insurance covers the cost of repairs or replacement of vehicle, but the situation in which risk cover is applicable are different from collision insurance. This risk cover protects against the damages to vehicle caused from fire, stolen vehicle or vandalism Limitation - This type of risk cover does not provide cover for medical bills of passangers/co-passangers or third party and also damages caused accidents with other vehicle or objects Persons covered - No persons are covered in this type of insurance cover.
	Recommendation: Considering the risks covered by various insurance policies, it is preferred to have all the insurance policies for the car. But, if it is not viable to buy all of the above insurance covers, then at least automobile medical coverage and automobile liability insurance shall be taken, since this will enable the buyer to cover its medical expenses and also to pay to third party for damages to their vehicles and also to pay for their medical bills.