Why don't private insurance companies cover buildings for floods?

Expert Solution

The private companies don't cover buildings for floods because the insurance is likely to be taken by people who have high probability of getting impacted by flood. The other people will not opt for the cover. The insurance companies operate with a concept that large number of people should opt for insurance and only small number should apply for reimbursement. But in this case, only limited number of people will opt for the cover and the risk factor will be higher for insurance companies.

keosha answered 2 years ago

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