Picture This Carrie Chandler is a professional photographer and earns \($50,000\) before taxes. Carrie has been fairly diligent about establishing a financial plan and working toward achieving her financial goals. Two years ago, she bought a condominium, and it has appreciated sufficiently that she has \($40,000\) in home equity. She has also accumulated \($25,000\) in savings and paid off her student loan. Recently, Carrie paid off the balance on the automobile loan for her 2002 vehicle. After looking at Carrie’s financial situation, her insurance agent suggests that she consider increasing her automobile insurance coverage. Her current coverage is \($25,000\) Part A bodily injury liability per person, \($50,000\) per accident, and \($15,000\) property damage liability. She also has Part B medical expense coverage of \($10,000\) per person and uninsured motorist protection of \($25,000\) per person, and \($50,000\) per accident. She has been carrying property damage insurance on the car.

1. Given the value of Carrie’s household assets, what auto insurance liability limits would you recommend? Explain.

2. Assuming that Carrie’s car is in fairly good condition and is worth \($10,000\), should she carry property damage insurance and, if so, what type(s) and in what amount(s)?

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