Abraham has just purchased his first car. His bank, First State Bank, loaned him the money to buy the car and has required him to purchase insurance to protect the car as the collateral for the loan. Which basic types of coverage should Abraham buy to satisfy the bank requirement and to best protect himself from the risks of operating an automobile? A) Collision coverage only.
B) Collision and comprehensive coverage only.
C) Collision, uninsured motorist, and comprehensive coverage.
D) Collision, uninsured motorist, comprehensive, and liability coverage.

Option D) Collision,uninsured motorist,comprehensive,and liability coverage.

Explanation:

A Collateral is Simply an item of value used to secure the principal portion of a loan. It is usually required when requesting for loan. It is anything of value that could be used to cover the value of the loan.

Cars has different types of insurance coverage. Some of which are:

1.Liability (required by law)

2.Collision (may be required by lender)

3.Uninsured/Underinsured (optional but recomended)

4.Comprehensive(may be required by lender)

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