California faces one of the largest flood insurance coverage gaps in the US, according to a recent Neptune Flood report, which revealed that while 2.3 million properties in the state are expected to face flood risk over the next 30 years, only 1.4% currently hold residential flood insurance.
The report, by Neptune Flood Research Group, documents how flooding driven by atmospheric rivers, urbanisation, ageing infrastructure, and post-wildfire conditions represents a persistent, underappreciated threat to California homeowners.
This occurs despite a 35% drop in the National Flood Insurance Program (NFIP) participation since 2016.
According to Neptune, modern flood modelling identifies more than 2.2 times as many properties at substantial flood risk as the US Federal Emergency Management Agency (FEMA) flood maps, uncovering nearly 600,000 additional properties outside designated high-risk zones.
Matt Duffy, President, Neptune Flood, said: “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.”
The report also revealed that flood losses are highly concentrated, with ten California counties accounting for nearly two-thirds of all NFIP losses since 1978.
Despite this high concentration of risk, only 2.7% of residential properties in these ten counties are covered by flood insurance.
Moreover, 45% of NFIP claims occur outside mapped floodplains. Despite this, only 34% of NFIP contracts in force are located outside FEMA-designated high-risk zones, far below Texas (66%) and Louisiana (50%).
Additional key findings indicate that NFIP coverage limits are insufficient for California. Premiums are also increasing while participation declines, with average NFIP premiums in California having risen by over 33% since 2016. Furthermore, post-wildfire flood risk is significantly elevated.
“The report calls for a coordinated response to close the coverage gap, including investment in flood infrastructure, modernisation of FEMA flood maps, expanded access to private flood insurance, and greater integration of flood resilience into California’s housing and development standards,” Neptune stated.
