Flood risk across the United States is increasing as climate-driven weather events become more frequent and severe, yet millions of homeowners remain financially unprotected due to inadequate flood insurance coverage.
Recent research from the Federal Reserve Bank of Philadelphia estimates that annual flood losses to single-family homes amount to $24.4 billion, with about 70% of that exposure – roughly $17.1 billion – going uninsured each year.
The latest report from Neptune Research Group highlights the extent of underinsurance nationwide, noting that the issue affects both uninsured households and those with insufficient coverage.
The study found that nearly 85% of at-risk single-family homes lack adequate flood protection, leaving homeowners vulnerable to thousands of dollars in uncovered damages annually.
According to Neptune’s findings, large coverage gaps persist across the country. About 77% of at-risk single-family homes outside of FEMA-designated Special Flood Hazard Areas (SFHAs) do not carry flood insurance.
A 2025 Guy Carpenter report reinforces these findings, warning that flood-related fatalities reached at least 166 across 24 states by late 2024, the highest total in nearly a decade. The report highlights that many of these incidents occurred outside FEMA’s designated high-risk flood zones, suggesting that outdated flood maps may leave millions unaware of their true exposure.
Even within SFHAs, where flood coverage is often mandated, 52% of expected annual losses remain uninsured. Low-income households face the greatest financial strain, with more than 90% underinsured and uninsured losses frequently exceeding 20% of annual income.
Behavioral and economic barriers are key contributors to this gap, including limited public awareness about flood risks, affordability concerns, and skepticism regarding climate change impacts.
Neptune’s research indicates that nearly 90% of homes that would financially benefit from a policy remain underinsured despite available options in both federal and private markets.
The report suggests that private insurers could play a larger role in addressing the shortfall. Approximately 95% of National Flood Insurance Program (NFIP) policyholders would meet private market underwriting standards, and as many as 60% could qualify for lower premiums.
Trevor Burgess (pictured above), CEO of Neptune Flood, says the country is facing a significant insurance gap for one of its most costly natural perils.
“At Neptune, we believe that closing the coverage gap is not just achievable, it’s our responsibility. The private sector has the tools and technology to protect millions of American families from the devastating financial impact of flooding,” he said.
Regional data also reveals stark protection gaps. In Texas, for example, more than 2.1 million properties are projected to face flood exposure within the next 30 years, yet only 7% currently hold any form of flood insurance.
Analysts note that much of this uninsured risk sits outside FEMA’s mapped floodplains, creating a significant protection shortfall for households that may believe they are safe from flood hazards.
The low rate of insurance uptake is also evident during actual events. Following flash floods in Central Texas in July 2025, the Insurance Information Institute reported that only 2.5% of impacted homeowners had NFIP policies in force.
Neptune’s report concludes that flood underinsurance has become a nationwide economic vulnerability requiring immediate action. The group recommends increasing risk education and public awareness beyond SFHAs, reducing regulatory barriers to encourage transitions from NFIP to private coverage, enforcing compliance in high-risk areas, and updating flood maps to reflect current risk conditions.
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