Zahra is reviewing home insurance policies to determine which offers the best value based on her needs. Policy A: Annual cost of $1,200 , covers fire and theft, $500 deductible, includes flood damage coverage Policy B: Annual cost of $1,000 , covers fire and theft, $800 deductible, does not include flood damage coverage Zahra lives in an area with a high risk of flooding. Which policy should she consider purchasing to maximize her benefits, considering her financial situation?
Answer
A
Policy A, because it has a lower deductible
B
Policy A, because it provides additional flood damage coverage, which is crucial for high-risk areas
C
Policy B, because it excludes flood damage coverage, which is unnecessary
D
Policy B, because it is cheaper annually
Explanation
Zahra lives in an area with a high risk of flooding, so flood coverage is an important benefit. Policy A includes flood damage coverage and has a lower deductible ($500 versus $800), though it costs $200 more per year. The added protection makes Policy A the stronger choice for her needs; Policy B’s lower annual price does not make up for its lack of flood coverage.
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