Week 8 Discussion.docx - BASIC PARTS OF AUTO INSURANCE Auto insurance is insurance against financial loss if you are in a car accident Auto insurance is

Week 8 Discussion.docx - BASIC PARTS OF AUTO INSURANCE Auto...

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BASIC PARTS OF AUTO INSURANCE Auto insurance is insurance against financial loss if you are in a car accident. Auto insurance is a contract between you and the insurance company in which you agree to pay a monthly premium and the insurance company agrees to pay a specified amount for any losses defined in your policy. Losses that exceed your policy’s limit are your liabilities, so it is important that you have adequate coverage. To legally drive your car, you are required by law to carry a minimum level of auto insurance. However, most experts agree that the minimum coverage required by law is insufficient. There are four basic parts of automobile coverage: Part A: Liability coverage Part B: Medical payment Part C: Uninsured/underinsured motorist coverage Part D: Comprehensive physical damage coverage Part A: Liability coverage: Liability coverage pays for losses that you are liable for related to bodily injury , property damage , lawsuits , and defense costs . Bodily injury coverage protects against expenses related to deaths or injuries resulting from an accident that you caused. Property damage coverage protects against costs for damage to another person's car or cars involved in an accident that you caused, as well as damages to other types of property (such as lamp posts or fire hydrants). Lawsuit coverage covers losses related to any lawsuit resulting from an accident; in addition to the maximum amount of expenses your policy covers for a lawsuit, your policy may also cover your defense costs if the case goes to trial. Liability coverage may be listed on your policy as a combined limit or as a split limit, depending on the type of insurance you have. Combined-limit insurance lists one maximum amount that the insurance company will pay to cover all types of liabilities. Split-limit insurance lists the maximum amount that the insurance company will pay for each of the specific types of liability. For example, if you have a 100/300/50 split-limit insurance policy,
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  • Spring '08
  • gia
  • Automobile

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