Article: American Homeowners and Their Insurers Face a Flooding Crisis From Within by James Dearden

1. What are the causes of increasing costs to insurance companies of water damage to the homes of policyholders?

2. Washing machines on higher floors of homes cause more damage when hoses burst than do machines in basements. Should insurance companies set higher prices for policies in which homeowners install machines on higher floors?

3. Is there a moral hazard explanation for some of the increases in damages and costs to insurance companies?

4. Who pays for the increasing costs of water damage to homes, insurance companies or their policyholders?

5. From only the information provided in the article, can you estimate the number of home insurance policies in the United States? [Is this a fair critical thinking question?]