The U.S. government provides home insurance for floods. The government will pay no matter how many times floods destroy a home. Does this policy create a moral hazard problem? Explain. Part 2 The government's flood insurance policy Part 3 A. does not cause a moral hazard problem because local governments discourage development in disaster-prone areas. B. causes a moral hazard problem because insurance premiums are higher in disaster-prone areas. C. causes a moral hazard problem because people are more likely to build in disaster-prone areas. D. does not cause a moral hazard problem because floods are uncontrollable events