Personal Finance 1st Edition by Jack R. Kapoor

Exercise 24

1?What is the purpose of financial responsibility laws?

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2?What are the main coverages included in most automobile insurance policies?

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3?What is no–fault insurance?

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4?How does collision coverage differ from comprehensive physical damage coverage?

Action Application Survey several people to determine the types and amounts of automobile insurance coverage they have. Do most of them have adequate coverage?

Step 1 of 4

(1) Purpose of financial responsibility laws:

A financial responsibility law is a state legislation which requires the drivers to prove the ability of the driver to cover the cost of injury or damage that is caused by the automobile accidents. When any injuries or property damage is significant occurred because of any accident the driver involved in the accident will be required to file a report with the concerned state and should show the financial responsibility. The main purpose of this law is to protect the public lives and property damage caused by the drivers.