Liability insurance is one of the integral parts of the general insurance system, offering protection to the insured party against financial claims after he has been found liable for causing injuries and damages to people and property. It is highly unlikely that an individual would be less careful due to the existence of liability insurance. In the case of a motorist, an injury to a third party will most likely cause an injury, which may be catastrophic or lead to huge personal liability to the individual, thereby giving him the incentive to drive carefully. Moreover, most individuals who obtain liability insurance are less likely to exhibit careless driving, such as drinking and driving, than those who are uninsured and are more likely to exercise risk-avoiding behaviors. Moreover, the quantity of uninsured accident costs that are not recoverable from the liability insurer exceeds those insured; thereby, individuals will be compelled to be more careful (Margolies, 2020). The liability insurance contract terms may also encourage careful behavior as the insurance may only cover unintended negligence where deliberate accidents are excluded and may be penalized. I agree that he does not need to take higher liability insurance limits if he does not make as much money as the doctor would manage. This is because higher limits in liability insurance often result in payment of higher premiums, which leads to a more expensive policy. Thus, to balance the policy's cost and coverage, he may opt for lower limits but with less protection. Moreover, if he cannot pay high amounts when his limits are exhausted by a single devastating accident, he should forego high limits. Nevertheless, if he is involved in high-risk environments, he should opt for higher limits to have better protection.
References
Margoties, B. (2020). The insurance policy as economic tool: moral hazard and adverse selection as a means of commercial liability insurance interpretation. Tort Trial & Insurance Practice Law Journal , 55 (1), 1-32.
Delegate your assignment to our experts and they will do the rest.
