Which statement regarding flood insurance is true?

The statement that flood insurance is backed by the National Flood Insurance Program (NFIP) is accurate. The NFIP was established by the federal government to provide affordable flood insurance to property owners, renters, and businesses in participating communities. This program aims to reduce the financial impact of flood events and encourages communities to adopt and enforce floodplain management regulations.

Flood insurance through the NFIP is crucial because standard homeowner's insurance policies typically do not cover flood damage. This program plays a significant role in promoting flood preparedness and mitigation efforts across the country. It also provides a safety net for those at risk in flood-prone areas, ensuring they have access to necessary financial resources in the event of flood damage.

In contrast, flood insurance is not always mandatory for homeowners; it depends on whether the property is located in a high-risk flood zone. Additionally, flood insurance does not cover all types of water damage, as it specifically covers damage from flooding but not from other sources like burst pipes or sewer backup unless additional coverage is purchased. Finally, flood insurance is available for both residential and commercial properties, not solely limited to commercial entities.