California homeowners appear to be underinsured against the threat of flooding, with a significantly lower percentage carrying flood insurance than the national average. This lack of coverage is particularly striking given the state’s diverse flood risks, which range from coastal surges to river flooding and even hurricane-related damage.
My analysis of flood insurance statistics compiled by ValuePenguin by LendingTree, focusing on the National Flood Insurance Program (NFIP), the primary provider of this coverage, reveals a notable gap. While California accounts for approximately 10% of the nation’s housing units, it holds only 4% of the 4.7 million flood policies nationwide.
This disparity is further highlighted by comparing California’s coverage to states frequently associated with flooding. For instance, Florida, often associated with hurricanes, leads the nation with 1.77 million NFIP policies. Texas follows with 639,256, Louisiana with 434,853, New Jersey with 200,764, and South Carolina with 198,606.
It’s important to clarify that traditional homeowner’s insurance typically doesn’t cover flood damage. This gap in coverage is a key reason why flood insurance is crucial, as extreme rainfall and ocean surges can lead to significant property damage. However, it’s important to note that the government’s flood insurance policies have coverage limits, providing up to $250,000 for structural damage and $100,000 for contents. This limited coverage might be another factor influencing the relatively low uptake of flood insurance in California, where only 1.3% of homes are covered.
This percentage places California 20th among all states in terms of flood insurance coverage, significantly below the national average of 3.3%. Louisiana, with 21% of homes covered, leads the nation in flood insurance penetration, followed by Florida (18%), Hawaii (11%), South Carolina (8%), and Delaware (6%).
The cost of flood insurance in California is another consideration. The average annual premium is $993, ranking 20th nationally and 11% above the national average of $892. The most expensive policies are found in West Virginia, at $1,450 per year, followed by Connecticut ($1,306), Kentucky ($1,272), Pennsylvania ($1,261), and New Jersey ($1,247).
While Californians seem to focus on other risks, such as fire (covered by traditional home insurance) or earthquakes, the potential for flood damage shouldn’t be ignored. Only 90% of Californians have home insurance, and just 12% have earthquake coverage.
The federal government’s National Risk Index ranks states based on property perils. When considering three watery hazards typically covered by flood insurance, California ranks 22nd for coastal flooding risk, with New Jersey, Delaware, Louisiana, Washington, and Oregon being the riskiest. The state ranks 29th for river flooding, with Louisiana, Texas, West Virginia, North Dakota, and Tennessee facing the greatest dangers. Furthermore, California ranks 38th for hurricane risk.
Even events like Hurricane Hilary in August 2024, though not officially classified as a tropical storm, caused significant water damage in Southern California. The areas at the highest risk for hurricanes are Florida, Louisiana, South Carolina, North Carolina, and Mississippi.
According to my analysis, California has the 37th-highest overall flood risk among the states when considering a combination of these variables. The states with the highest flood risk are Louisiana, Mississippi, Texas, New Jersey, and Florida, which collectively account for two-thirds of all NFIP policies.
To determine if flood insurance might be beneficial, homeowners should check if their property is located in an official flood zone. The Federal Emergency Management Agency (FEMA) provides maps at https://msc.fema.gov/portal/search.
