Michelle is planning to build a house in an earthquake-free area. She has two pi
ID: 460823 • Letter: M
Question
Michelle is planning to build a house in an earthquake-free area. She has two pieces of land to choose from for her home's location. The first lot is far outside the nearest town. The second lot is just off the town's main street. Michelle knows the nearest fire station for both lots is located at the center of town. Additionally, the house can be built with a wood frame or with brick. If Michelle hopes to minimize the cost of her homeowner's insurance, where should she build her house and which material should she use?Explanation / Answer
Michelle should build the house at the first lot. As the lot is far outside the town the cost of land and the overall value of the house when fully constructed will have a comparatively less value than the second lot. The insurance coverage required for the house will be less and as the cost of insurance depends upon the coverage, even the cost will be less. The fire station will be far hence Michelle should use brick as it fire resistant material and can hold fire for around 1 to 4 hours depending upon the insulation done. This will give Michelle enough time to escape in case of fire hazard. The insurance cost can be further minimized if the house is built in compliance with the insurance companies regulations.