California faces one of the largest flood insurance coverage gaps in the United States, according to the recent Neptune Flood Report, which shows that while the state expects 2.3 million properties to be at risk of flooding over the next 30 years, only 1.4% of properties currently hold residential flood insurance.
This report from the Neptune Flood Research Group documents how flooding from atmospheric rivers, urbanization, aging infrastructure and post-wildfire conditions pose ongoing, under-recognized threats to California homeowners.
This occurs despite a 35% drop in participation in the National Flood Insurance Program (NFIP) since 2016.
According to Neptune, modern flood models identified more than 2.2 times the number of properties at severe risk of flooding than Federal Emergency Management Agency (FEMA) flood maps, and also identified nearly 600,000 additional properties outside designated high-risk areas.
“Flood risk is rising in California, but coverage is declining,” said Matt Duffy, president of Neptune Flood. “Millions of homeowners face an increasing and often misunderstood threat. Closing this gap will require broader access to modern flood insurance solutions, such as those offered in the private market.”
The report also shows that flood losses are highly concentrated, with ten California counties accounting for nearly two-thirds of all NFIP losses since 1978.
Despite the high concentration of risk, only 2.7% of residential properties in these 10 counties have flood insurance.
Additionally, 45% of NFIP claims occur outside mapped floodplains. Still, only 34% of active NFIP contracts are located outside FEMA-designated high-risk areas, well below Texas (66%) and Louisiana (50%).
Other important findings indicate that NFIP coverage limits are insufficient for California. Premiums are also increasing while participation rates are declining, with average NFIP premiums in California rising more than 33% since 2016. Additionally, flood risk increases significantly following wildfires.
“The report calls for a coordinated response to close coverage gaps, including investments in flood infrastructure, modernization of FEMA flood maps, expanded private flood insurance coverage, and greater integration of flood resilience into California’s housing and development standards,” Neptune said.
