Final answer:
The bodily injury liability portion of Bob's car insurance would cover injuries to people in the other car, not damages to vehicles or injuries to people in Bob's car. Insurance is based on risk-sharing and often includes deductibles or copayments to prevent moral hazards.
Step-by-step explanation:
If Bob is at fault in an accident involving a collision with another vehicle, the bodily injury liability portion of his car insurance would cover D) Injuries to people in the other car.
Bodily injury liability is designed to pay for the medical expenses, lost wages, pain, and suffering, or other damages to the individuals in the other vehicle who were injured as a result of the accident Bob caused. It does not cover injuries to people in Bob's car, nor does it cover damage to any property (neither Bob's car nor the other car involved).
The concept of auto insurance is based on collective risk-sharing, wherein the total costs of accidents from all insured parties are covered by the premium payments of the entire insured group.
To minimize moral hazards, policies often have deductibles and copayments, ensuring that policyholders have a financial responsibility either before the insurer starts to pay (deductible) or as a shared cost (copayment or coinsurance).