Option 1 states that both statements are individually true and that Statement II is the correct explanation of Statement I. Let`s dissect each statement to understand if this is true.

Statement I states that insolation is greatest when the sun is directly overhead and the sun`s rays are vertical. This is true because when the sun is directly overhead, the rays have to pass through less atmosphere, resulting in less scattering and more intense solar radiation reaching the surface.

Statement II states that when the sun is lower in the sky, the same amount of solar energy spreads over a greater area of ground surface, so insolation is lower. This is also true because when the sun is lower in the sky, the angle of incidence of the sun`s rays on the Earth`s surface is lower. This means that the same amount of solar energy is spread over a larger area, resulting in less intensity of solar radiation reaching the surface.

However, it is not correct to say that Statement II is the correct explanation of Statement I. While Statement II does provide additional information about how the angle of the sun affects insolation, it does not directly explain why insolation is greatest when the sun is directly overhead and the rays are vertical. Therefore, Option 1 is incorrect.

The correct answer is Option 2,