Case 3: A Student Buys Insurance for a Used Car

Makiko Iwanami, a student from Osaka, Japan, is a member of your history class. She is considering the purchase of a used car and has been told that she must buy automobile insurance to register the car and obtain license plates. She has come to you for advice, and you have decided to focus on three aspects of automobile insurance.

1. Explain how liability insurance works in the United States. Advise Makiko about which liability insurance limits she should select.


2. Makiko is especially impressed that automobile insurance includes medical payments coverage because she has no health insurance. Explain why the medical payments coverage does not actually solve her health insurance problem and describe the type of coverage it provides.


3. Makiko is going to pay cash for the car and doesn't plan to spend more than $2000. Outline the coverage provided by collision insurance and factors that might make such coverage optional for Makiko.


   

Go to another case in this chapter Case 1 Case 2 Case 3 Case 4