What is the objective of flood insurance?

The objective of flood insurance is to provide financial protection against damages caused by flooding. Flood insurance specifically covers losses to real estate and personal property due to flooding, helping individuals and businesses recover from the significant financial impact that flood events can have. This insurance is particularly important in areas prone to flooding, as traditional property insurance policies often exclude flood-related damages.

The other options do not accurately reflect the purpose of flood insurance. Flood insurance is not intended to cover all natural disasters, as it specifically targets flood-related incidents and does not apply to other types of disasters like earthquakes or wildfires. It also does not include coverage for theft during floods; its primary focus is on damage caused by water. Additionally, while some aspects of flood insurance may cover the replacement of certain items, it does not generally guarantee the replacement of damaged property with new items as its primary objective. Instead, it compensates for the actual cash value or replacement cost of covered property within the limits and conditions of the policy.