Sally just purchased a beautiful home on a riverbank for what she thought was a very good deal. She later learned that her house was very susceptible to flood damage during the rainy season. Which of the following statements best describes the effect the location of Sally’s new home will have on her homeowners insurance premium?

a.

Financial loss due to flood damage is likely. Her insurance premiums will be higher than homes not on the waterfront.

b.

Since floods are likely, the value of the home decreases significantly, lowering the insurance premium at the same time.

c.

Since floods happen so infrequently, they are not considered a real threat to the value of the home. Sally’s insurance premium will not be affected.

d.

While extremely annoying, flood damage is usually inexpensive and will not affect the value of the home. Sally’s insurance premium should not be affected.

Statements which best describes, effect the location of Sally’s new home is, (A) Financial loss due to flood damage is likely. Her insurance premiums will be higher than homes not on the waterfront.

What is natural disaster insurance?

The natural disaster insurance is the type of insurance in which the insurance company pay the total amount of loan to the beneficiary in case of loss of his property or life in a natural disaster such as earth quack, flood etc.

The face value of natural disaster insurance is depends on following factor:

The face value of natural disaster insurance depends on the location of the house or property.
If it is based on the place where the risk of loss due to natural disaster is low, then face value is high and vice versa.
Insurance premiums of such places is low, than the place which are at high risk of natural disaster.

Sally just purchased a beautiful home on a riverbank for what she thought was a very good deal.

She later learned that her house was very susceptible to flood damage during the rainy season.

In this case, the face value or insurance premiums is high as her house was very susceptible to flood damage during the rainy season.

Thus, the statements which best describes the effect the location of Sally’s new home will have on her homeowners' insurance premium is, (A) Financial loss due to flood damage is likely.

Her insurance premiums will be higher than homes not on the waterfront.

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