Flood risk is rising rapidly across the United States due to the increasing frequency and intensity of climate-driven weather events. Yet, millions of American homeowners remain financially exposed due to insufficient or non-existent flood insurance coverage. Research from the Federal Reserve Bank of Philadelphia exposes the staggering scale of this problem: of the $24.4 billion expected annual flood losses to single-family homes, approximately 70% (or $17.1 billion) are uninsured.

The latest issue by Neptune Research Group explores the extent of the nation’s flood underinsurance crisis. The findings are clear: underinsurance is not limited to those without a policy. Nearly 85% of all at-risk single-family homes in the U.S. lack sufficient coverage, facing thousands of dollars of uninsured loss annually, underscoring the financial risk homeowners carry.

Coverage gaps are widespread and persistent:

• 77% of at-risk single-family homes outside FEMA high-risk flood zones, or Special Flood Hazard Areas (SFHAs), have no flood insurance
• 52% of total expected flood losses inside SFHAs are uninsured
• Over 90% of low-income households are underinsured, with uninsured expected losses often exceeding 20% of annual income

Behavioural, economic, and informational barriers (including limited awareness, affordability concerns, and skepticism about climate impacts) contribute significantly to this shortfall. Critically, nearly 90% of homes that would financially benefit from purchasing flood insurance remain underinsured.

However, the solution is within reach. With 95% of National Flood Insurance Program (NFIP) policyholders meeting private market underwriting standards and up to 60% eligible for lower premiums, the private market has the tools, technology, and flexibility to close this gap, offering higher limits, broader coverages, and faster service.

“The U.S. is facing a hidden flood insurance crisis,” said Trevor Burgess, CEO of Neptune Flood. “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.”

Flood underinsurance is no longer a marginal issue. It is a national economic vulnerability that demands urgent action. To reduce financial vulnerability and build national flood resilience, Neptune recommends a coordinated strategy:

• Expand risk education and flood awareness, especially outside SFHAs
• Facilitate NFIP-to-private transitions by removing regulatory and lender friction
• Enforce compliance in high-risk zones and modernize flood maps

Click here to view the complete analysis.