A California town that lies on a floodplain is participating in a parametric insurance pilot project funded through a two-year $US200,000 ($299,000) grant.

Funds will be paid to residents of Isleton, on the Sacramento-San Joaquin Delta, if floodwater reaches a predetermined depth.

State insurance commissioner Ricardo Lara says innovative approaches are needed to address climate change risks and help communities become more resilient.

“We have seen the devastation that climate-induced flooding can have in California in such places like Pajaro, Tulare Lake, and most recently in San Diego County,” Mr Lara said.

“Insurance is a key driver of financial resilience, and we need to think creatively about how new insurance pilots like this delta community project can be tested and scaled to help our most vulnerable communities.”

The project is led by the California Department of Insurance and funded by the California Department of Water Resources (DWR). The cover is separate from and augments insurance residents may have through the National Flood Insurance Program.

“Growing weather extremes in California requires re-examining how we protect communities from flooding and the role of insurance in getting people back on their feet if destructive flooding does occur,” DWR director Karla Nemeth said.

“Ultimately, we hope this effort can lead to models of affordability for people across California, particularly those with limited income.”

The project is being implemented by the City of Isleton Delta Geologic Hazard Abatement District.

A 1972 levee failure caused a flood that inundated Isleton and much of the surrounding agricultural area, with residents evacuated for many months.