QuestionJuly 15, 2025

Because Luis's house is near a river that has been known to overflow its banks, he is more concerned about having flood insurance than his sister Maria, who lives at the top of a hill. This is an example of A) parol evidence B) adverse selection C) estoppel D) consideration

Because Luis's house is near a river that has been known to overflow its banks, he is more concerned about having flood insurance than his sister Maria, who lives at the top of a hill. This is an example of A) parol evidence B) adverse selection C) estoppel D) consideration
Because Luis's house is near a river that has been known to overflow
its banks, he is more concerned about having flood insurance than his
sister Maria, who lives at the top of a hill. This is an example of
A) parol evidence
B) adverse selection
C) estoppel
D) consideration

Solution
3.4(214 votes)

Answer

B) adverse selection Explanation This scenario illustrates adverse selection, where individuals with higher risk (Luis) are more likely to seek insurance compared to those at lower risk (Maria). This can lead to an imbalance in the insurance market.

Explanation

This scenario illustrates adverse selection, where individuals with higher risk (Luis) are more likely to seek insurance compared to those at lower risk (Maria). This can lead to an imbalance in the insurance market.
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