California Wildfires Increase Flood Risk
The devastating wildfires that have recently ravaged California have created new challenges for homeowners by significantly increasing the risk of flooding and mudflows. The destruction of critical vegetation, which normally absorbs rainfall, leaves the ground unable to absorb water, making affected areas more susceptible to flash floods.
According to a CoreLogic Risk Score analysis, over one million homes in Los Angeles, San Diego, and San Francisco will experience a substantial rise in their flood risk by 2050. Homes that currently have low flood risk could see their risk level increase by 40 points or more, on a scale from one (very low) to 100 (extreme). CoreLogic projects that the risk of flooding in these areas will exceed the risk of wildfires by 2050.
The increased risk poses a significant financial challenge for homeowners in these areas. Climate change has contributed to an increase both in the number and severity of natural disasters. As a result, many insurance companies have raised premium costs and, in some cases, withdrawn from areas most prone to disasters. Homeowners may be forced to purchase expensive flood insurance to protect their homes. The Federal Emergency Management Agency (FEMA) estimates that even a single inch of water in a home can cause approximately $25,000 in damage.
Those in areas where private insurance is unavailable can turn to the National Flood Insurance Program (NFIP), a federal government program that provides a last resort. However, the cost of NFIP insurance has also increased due to higher reinsurance rates, with a recently adopted calculation formula increasing the cost, particularly in high-risk areas. This combination of increased flood risk and rising insurance costs poses a serious threat to homeowners for the coming decades.
