You own a house worth $400 000 that is located on a river. If the river fl oods moderately, the house will be completely destroyed. Moderate fl ooding happens about once every 50 years. If you build a seawall, the river would have to fl ood heavily to destroy your house, and such heavy fl ooding happens only about once every 200 years. What would be the annual premium for a fl ood insurance policy that off ers full insurance? For a policy that pays only 75% of the home value, what are your expected costs with and without a seawall? Do the diff erent policies provide an incentive to be safer (i.e., to build the seawall)?