California homeowners often seem unconcerned about flood risks, with notably few securing insurance against potential water damage. Data from the federal government’s National Flood Insurance Program (NFIP) reveals a surprising trend.
Last year, 184,729 California homes had an NFIP policy, the sixth-highest number in the nation. However, while the state accounts for 10% of all U.S. homes, only 4% of the 4.7 million flood policies nationwide are in California.
It might seem odd to consider flooding in a state frequently battling droughts, where wildfires are regarded as the primary home hazard. Flood insurance is often associated with hurricane-prone regions. Florida leads the nation with 1.77 million policies, followed by Texas, Louisiana, New Jersey, and South Carolina.
But flood insurance is frequently misunderstood. It can cover damage from a variety of disasters not covered by standard homeowner policies, such as rising water due to heavy rains or ocean surges. Government flood coverage, however, is limited, covering up to $250,000 for structural damage and $100,000 for contents.
This shortfall is a significant factor in why only 1.3% of California’s residential properties are covered by flood insurance. This means 98.7% of homes lack this protection. California ranks 20th among the states for the proportion of homes with flood insurance. Statewide, this number is significantly lower than the national average of 3.3% of all covered homes.
Louisiana leads the nation in flood insurance coverage, with 21% of its housing covered, followed by Florida, Hawaii, South Carolina, and Delaware.
As for the cost, a standard California flood policy costs around $993 annually – 20th highest in the U.S. and 11% above the national average of $892. The most expensive policies are found in West Virginia, Connecticut, Kentucky, Pennsylvania, and New Jersey.
Many Californians “bet the house” in other ways, with 90% opting for traditional home insurance, which often prioritizes fire risk. Only 12% have earthquake coverage.
Wet Risks and Flood Hazards
So, what are the odds a Californian will experience a flood event? The federal government’s National Risk Index assesses relative property perils across all states, including three watery hazards typically covered by flood insurance. California ranks 22nd highest for coastal flooding dangers.
The states with the greatest coastal flood risk are New Jersey, Delaware, Louisiana, Washington, and Oregon. California ranks 29th in river flooding hazards. The state’s usually dry creeks can turn into raging streams with the arrival of rare storms. Louisiana, Texas, West Virginia, North Dakota, and Tennessee face the greatest river flood risks.
Additionally, California is 38th in hurricane risk. Hurricane Hilary in August 2024, though not a tropical storm, caused significant water damage in Southern California.
Bottom Line
Natural disasters of all kinds pose a lightly discussed risk of property ownership, with California holding the 37th-highest flood risk among all states according to a composite index of the three watery worries. Such modest property loss odds may explain the low uptake of flood insurance for Californians.
Louisiana, Mississippi, Texas, New Jersey, and Florida—the riskiest spots—account for two-thirds of all NFIP policies.
Should Californians have flood insurance? Homeowners should first check if their property is within an official flood zone. FEMA’s map at https://msc.fema.gov/portal/search provides this information.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at [email protected]
