Question

In: Accounting

Which of the following losses is most likely to be covered under your auto liability insurance?...

Which of the following losses is most likely to be covered under your auto liability insurance?

a.

an auto repair bill for repairs to the car of a driver who negligently caused an accident with you.

b.

a legal bill incurred by your insurance company who is defending you from a claim related to an accident caused by your negligence.

c.

a medical bill for injuries to a passenger in your car arising from an accident in which you were not at fault.

d.

an auto shop bill for repairs of a car you own due to an accident caused by your negligence.

e.

a medical bill for your injuries related to an accident that you caused.

Speculative risk is NOT:

The opportunity for a gain.

The opportunity for a loss.

Eliminating all risk.

The opportunity for no loss or gain.

Solutions

Expert Solution

1)

Auto liability insurance : If you cause a car accident, in other words, if you are liable for the accident, liability coverage helps pay for the other person's expenses.

Auto liability coverage comes in two forms: bodily injury liability coverage and property damage liability coverage.

Liability coverage typically doesn't pay to repair damage to your own car after an accident and also the accident should be caused by our own fault.Liability coverage also does not extend to costs associated with your own injuries after an accident you cause

So the correct option is :

b.

a legal bill incurred by your insurance company who is defending you from a claim related to an accident caused by your negligence.

2)

speculation risk is a type of risk that when undertaken it results in an uncertain degree of gain or loss.

Therefore, "Eliminating all risk" is the correct answer which does not mean speculation risk.


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