What does the term "flood insurance" refer to?

Flood insurance specifically refers to the coverage for damage to property caused by floodwaters. This type of insurance is critical in areas that are susceptible to flooding, as standard homeowners insurance policies often do not include protection against flood-related damages. Flood insurance is designed to provide financial assistance to property owners when their buildings and belongings are damaged or destroyed due to flooding. This coverage includes both residential and commercial properties and is essential for comprehensive risk management, especially in flood-prone regions.

The other options do not accurately describe flood insurance. Fire damage coverage, limited scope to properties near lakes, or coverage restricted to agricultural flooding misrepresent the broader purpose and function of flood insurance, which aims to address all potential flood-related damages, regardless of the type of property affected.