Environmental
A Texas coastal property in a FEMA 100-year flood zone (Zone AE) requires flood insurance for a federally backed mortgage. The 100-year flood designation means:
AThe property floods every 100 years
BThere is a 1% annual chance of flooding (once in 100 years on average)✓ Correct
CThe property is 100 feet above sea level
DThe flood insurance costs $100 per year
Explanation
A 100-year flood zone (Zone AE) has a 1% annual probability of flooding — not that it floods once every 100 years. Over a 30-year mortgage, a property in Zone AE has about a 26% chance of experiencing at least one flood.
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