Flood vs Earthquake
Just curious the difference between flood vs earthquake. Earthquake seems to have same issue of adverse selection as flood.Some areas tends to be more frequent, like east/west coast, than continental area. Aren't we fear of adverse selection that only east/west coast residences are willing to buy earthquake coverage? Why we have coverage for earthquake, not for flood?
Comments
There is no good reason for this. The federal government has a program called DFAA or Disaster Financial Assistance Arrangements where they assist provinces and territories if a disaster (including flood) causes losses in excess of resources. (Of course, this is the most costly way of dealing with floods. It's like always going to the emergency room when you're sick instead of seeing the doctor or taking steps to be healthy.) Here's a link to more information:
There is however another program called NDMP or National Disaster Mitigation Program:
NDMP is focused on preparing for, and mitigating, flood losses. They are also trying to create conditions so that private insurers will enter the market for overland flooding.
The above links are not specifically covered on the exam but they might be interesting to read in your spare time!