If you buy an automobile, the law requires you to have insurance for that vehicle. Explain...

If you buy an automobile, the law requires you to have insurance for that vehicle. Explain the difference between liability auto insurance and full coverage auto insurance. Which insurance would you select for a new car? Why?

Solutions

Expert Solution

It is mandatory for a vehicle to have an auto insurance by law. The difference between liability auto insurance and full coverage auto insurance is-

Liability auto insurance only covers the damages caused to any thirtd party by you vehicle. It does not cover any damage caused to your own vehicle in case of an accident/ theft.
There is not policy known as full coverage auto insurance. Actually, it means a combination of insurances taken to cover all aspects of damges to the car, driver, and any third party. It almost covers all claims in case of unforeseeable event.

For a new car, you should select a full coverage insurance. As the car is new, there are chances of it getting damaged and dropping in value. Also, it will cause huge cash outflow to repair the vehicle as you cannot buy a new one currently. Hence, it is advisable to select a full coverange/ combination insurance for a new car.

Let me Leow in the comment section in case of any doubt.

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

Automobile Insurance Program: Writes a program that prints the insurance fee to pay for a Vehicle...

Automobile Insurance Program: Writes a program that prints the insurance fee to pay for a Vehicle according to the following rules: A Honda that is All Wheel Drive costs $450. A Honda that is two wheels drive costs $350. A Toyota that is All Wheel Drive costs $300. A Toyota that is Two Wheel Drive costs $250. A Nissan that is All Wheel Drive costs $200. A Nissan that is Two Wheel Drive costs $280.

Explain why hedging is like buying an insurance policy. To buy an insurance policy, you need...

Explain why hedging is like buying an insurance policy. To buy an insurance policy, you need to pay a premium; what is the corresponding premium in hedging? Give an example to clarify your answer.

You want to buy a $20,000 vehicle and if you finance it through the bank, the...

You want to buy a $20,000 vehicle and if you finance it through the bank, the five-year financing comes to $462.12 per month. What are the annual nominal and effective interest rates your bank charges if you know that the bank applies a daily compounding?

A motor vehicle has annual depreciation of $2,000, oil changes cost $280, automobile insurance cost $420,...

A motor vehicle has annual depreciation of $2,000, oil changes cost $280, automobile insurance cost $420, and license plates cost $140 . What is the annual amount of the total fixed operating cost for this vehicle?

You are offered a deal for purchasing a vehicle that requires you to pay $200 per...

You are offered a deal for purchasing a vehicle that requires you to pay $200 per month for the first year and payments of $400 per month during the second year. The APR is 18% and payments begin in one month. What is the present value of this 2-year loan?

You are starting a vegan restaurant and need to buy a vehicle for delivery orders. You...

You are starting a vegan restaurant and need to buy a vehicle for delivery orders. You have two models in mind. Model A costs $10,000 and is expected to run for 6 years; Model B is more expensive, with a price of $15,000 and an expected life of 10 years. The annual maintenance costs are $800 for Model A and $700 for Model B. Assume that the opportunity cost of capital is 10.6 percent. Using the information provided in the...

You are starting a vegan restaurant and need to buy a vehicle for delivery orders. You...

Assume you need to buy a new vehicle. The junker that you paid $6,000 for three...

Assume you need to buy a new vehicle. The junker that you paid $6,000 for three years ago has a current value of $1,500. You have narrowed the choice down to a used 2016 Jeep Cherokee with a blue book value of $8,500 and a new Hyundai Elantra with a sticker price of $20,380. You plan to drive either vehicle for at least five more years. REQUIRED: 1. Based on the following steps in the decision-making process, briefly describe the...

Assume you need to buy a new vehicle. The junker that you paid $6,000 for three...

Assume you need to buy a new vehicle. The junker that you paid $6,000 for three years ago has a current value of $1,500. You have narrowed the choice down to a used 2016 Jeep Cherokee with a blue book value of $8,500 and a new Hyundai Elantra with a sticker price of $20,380. You plan to drive either vehicle for at least five more years. REQUIRED: Based on the following steps in the decision-making process, briefly describe the key...

Assume you need to buy a new vehicle. The junker that you paid $6,000 for three...

Assume you need to buy a new vehicle. The junker that you paid $6,000 for three years ago has a current value of $1,500. You have narrowed the choice down to a used 2016 Jeep Cherokee with a blue book value of $8,500 and a new Hyundai Elantra with a sticker price of $20,380. You plan to drive either vehicle for at least five more years. REQUIRED: Based on the following steps in the decision-making process, briefly describe the key...

Subjects