Sampson s Continuing Case Answers Chapter 11

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Running Head: FINANCE

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Personal Finance
Name
Course
Professor
Date

FINANCE

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Chapter 11

Advice to the Sampsons concerning their car insurance. Do they have enough insurance?
Do they have enough insurance? Do they have too much insurance? How might they be
able to reduce their premium?
The Sampson family at the moment only has auto insurance liability coverage. It would
be wise if the family considers expanding particular coverage for and also subscribe to other
coverage types that they lack currently yet are essential to car owners and road users.
Liability Coverage
First, we consider liability coverage which compensates for injuries or damages to third
parties that the covered car driver causes in the event of an accident. A piece of comprehensive
advice to the Sampsons must consider the following possibilities:
Bodily injury coverage
Coverage of bodily injury: which is a liability coverage type that concerns bodily harm
afflicted on another driver in the event of an accident. The Sampson's currently has a cover of $
100, 000 per individual for bodily injury which by all standards is an amount sufficient for such a
cover. In retrospect, only $ 200, 000 amount of cover for all persons combined in an accident is
what the family has as bodily injury cover. In other words, the family's insurance company
would only compensate up to $ 200, 000 towards bodily injuries caused all individuals involved
in an accident caused by the car driver of the family car. Considering the average ratio dedicated
to the former cover which allows for a $ 100, 000 compensation for a single person, it would be
only be logical to increase the amount for latter cover to at least $ 350, 000 so that majority

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sharing quarter can remain as from $ 40, 000 and above given the modal number of accident
victims averages 5 persons and below.
Property damage liability coverage
Property damage liability coverage which compensates for damages caused to a third
party's car or property in the event of an accident. The current family cover on this is $ 20, 000
on the damage of property liability coverage, which seems way low as. An increase to $ 40, 000
will seem adequate (Madura, 2016).
Medical payment coverage
Medical payment coverage which settles the cost of medical expenses for a car driver or
sometimes includes the passengers in the event the driver assumes full responsibility for the
accident cause. The Sampson family currently lacks this cover putting them at the edge of risk.
At the moment, should one of the cars belonging to the family causes an accident where the
driver and few passengers sustain injuries that warrant medical intervention, the family will be
forced to foot the resulting medical bills from its sources (Madura, 2016). The family, therefore,
should consider obtaining at least $10,000 worth of medical payment coverage per individual.
Uninsured motorist coverage
Uninsured motorist coverage which covers personal harm in cases where a driver without
a cover causes an accident. The cover too is not among the ones the family subscribes to. As a
cautionary measure, the family should consider adding this cover to other covers they already
have since there are myriads of uninsured drivers on the road. Without this cover and the family
gets involved in an accident with a driver lacking insurance of whatever cover with the driver
being at fault, the family may be forced to incur their own medical cost which in most cases

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turns out to be colossus amounts. Bearing such in mind, the family should consider having a
policy worth of $ 300, 000 for this particular cover.
Collision and Comprehensive Coverage
The cover compensates for damages caused to property or a vehicle to a policyholder
who is at fault in the event of accident occurrence. The Sampson family equally lacks this cover.
The decision not to go for this particular cover may be informed by the fact that the cars owned
by the family are old and may not be worth to pay additional premiums unto (Madura, 2016).
Whether the family has enough insurance or too much insurance
From the above, it is clear the family does not have enough insurance neither does it have
too much of it considering the number of covers that still lack yet are vital to car owners and
road users. In fact, the above taking in more relatable terms depicts an underinsured family since
some of the covers the family already has been recommended for an increase for purposes of
comprehensive compensation.
Reducing Premium
The Sampson family could easily reduce the premiums they pay monthly by through an
increase in their deductible. The deductible can be defined as a monetary limit an insurance
company asks the individual to pay prior to covering an accident cost. Sampson family
deductible currently stands at $ 1000 which means the family must foot the first $ 1000 of total
claim before the insuring company compensates for the damages.
If the Sampson family considers raising their deductible to an amount such as $ 1 250- $ 1,500
to facilitate lowering the premiums they pay on a monthly basis. However, the family must

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ensure they are in a posit...

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