Millions of California properties face flood risk, but very few homeowners have insurance to cover it, according to a new report from Neptune Flood.
The report says 2.3 million properties across the state are at risk of flooding over the next 30 years. Even so, residential flood insurance penetration in California is just 1.4%. Neptune also said participation in the National Flood Insurance Program has dropped 35% since 2016, even as flood threats continue to grow.
According to the report, the danger is no longer limited to areas people typically think of as flood-prone. Neptune said atmospheric rivers, urban development, aging infrastructure, and conditions after wildfires are all adding to the risk for homeowners across the state.
The findings also suggest that official flood maps may not show the full picture. Using modern flood modeling, the report identified more than 2.2 times as many California properties at substantial flood risk compared with FEMA flood maps. That includes nearly 600,000 additional properties outside designated high-risk zones.
That matters because many flood losses are already happening outside those mapped areas. The report found that 45% of NFIP claims in California come from outside FEMA-designated floodplains. Still, only 34% of active NFIP policies are located outside those zones, a lower share than in Texas and Louisiana.
Losses are also concentrated in a small number of places. Neptune said the top 10 California counties account for nearly two-thirds of all NFIP losses since 1978, but only 2.7% of residential properties in those counties have flood insurance.
The report also points to a gap between insurance coverage and actual rebuilding costs. With median home values in California ranging from $750,000 to $800,000, the NFIP’s $250,000 residential building limit often covers less than a third of what it would cost to rebuild a home.
At the same time, coverage is getting more expensive. Average NFIP premiums in California have increased by more than 33% since 2016, which the report links to FEMA’s move to Risk Rating 2.0.
Wildfire is another factor shaping the state’s flood exposure. The report said recently burned areas can face debris flows with as little as half an inch of rain per hour, pushing flood risk beyond traditional floodplains.
“Flood risk in California is rising, but coverage is falling. Millions of homeowners are left exposed to a growing and often misunderstood threat. Bridging that gap will take broader access to modern flood insurance solutions, like those offered by the private market,” Neptune Flood president Matt Duffy.
