Question

Sara is having some trouble choosing insurance coverage, so she is discussing her possible choices with a friend. Which of Sara's reasons for rejecting insurance are reasonable?

1) All this insurance is so expensive!
2) I'm not getting vision insurance because I don't have any problems with my glasses.
3) Life insurance doesn't seem worth it because I take good care of myself.
4) As for car insurance, I'm going with the minimum coverage because I drive an old car, and accidents aren't very common on my commute.

Answer 1

Sara's choice to get minimum car insurance coverage because she drives an old car and believes accidents are rare may seem reasonable, but it's risky. Accidents can be costly and unpredictable, so it's crucial to ensure adequate financial protection despite the vehicle's age or perceived commute safety.

Step-by-step explanation:

Choosing the minimum coverage for car insurance because one drives an old car and perceives accidents to be rare may seem like a reasonable choice for Sara. However, it is essential to consider that accidents are unpredictable, and the cost of damages or liability can be substantial, regardless of the vehicle's age. Insurance is about safeguarding against financial risks and providing security in the event of unexpected occurrences.

As Sara knows her driving habits and the conditions of her commute, she has a unique insight into her risk level, which insurance companies struggle to ascertain. Nevertheless, opting for the minimum coverage may expose her to significant financial jeopardy if she's involved in an accident. Even though her commute appears to be low-risk, it's important to balance the potential savings on premiums with the financial protection much-needed in case of an accident.