UPDATE November 13, 2025
The National Flood Insurance Program (NFIP) is currently in temporary reopening due to a government funding package that includes a short-term reauthorization, but the program’s long-term reauthorization is still pending. This means the NFIP is issuing new policies and renewing existing ones, but the program will lapse again after January 30, 2026, unless Congress acts again. Existing policies and claims should continue to be processed, but a lapse in funding can disrupt new and renewal policies until reauthorization is granted.
What does this mean for you
Existing policies: If your policy was active before the lapse, it remains in effect until its expiration date, and claims should continue to be processed.
New and renewal policies: You can now apply for and renew policies but be aware that the program will lapse again on January 30, 2026.
What to do
If you need immediate coverage: Contact your insurance agent to apply for a new policy or renew an existing one as soon as possible.
If you are buying or selling a home: Be aware that a lapse could delay your closing if you require flood insurance through the NFIP.
ORIGINAL POST
The NFIP’s authority to operate is set to expire at midnight on September 30, 2025, coinciding with the end of the federal fiscal year. A government shutdown could begin on October 1 without reauthorization of the National Flood Insurance Program (NFIP), severely disrupting NFIP services.
Key Impacts of a Shutdown on NFIP
A government shutdown would halt non-essential federal activities, including most NFIP functions, because the program cannot enter into new contracts without appropriated funds. Here’s a breakdown:
- New Policies- | Suspended | No new flood insurance policies can be issued for properties in flood-prone areas. This affects homebuyers needing coverage for mortgage closings in Special Flood Hazard Areas (SFHAs).
- Renewals & Coverage Increases| Suspended | Existing policies remain in force until their expiration date, but renewals, endorsements, or increases in coverage cannot be processed. Policyholders must act before September 30 to avoid gaps.
- Claims Processing | Partially Available | Valid claims on existing policies can be paid using available funds in the National Flood Insurance Fund (NFIF), but prolonged shutdowns could strain resources, especially after major disasters. FEMA has never failed to honor claims, but delays are possible. If a shutdown occurs, Congress has retroactively covered renewals in past lapses, minimizing long-term harm. The longest U.S. government shutdown lasted 35 days from December 22, 2018 until January 25, 2019.
- Real Estate Transactions | High Risk of Disruption | An estimated 1,300+ property sales per day could be delayed or canceled, as lenders require proof of flood insurance for federally backed loans. This could lead to broader economic ripple effects, including up to $69.7 billion in annual income losses from stalled home sales.
- Borrowing Authority| Severely Limited | NFIP’s ability to borrow from the Treasury drops from $30.425 billion to $1 billion limiting post-disaster payouts if premiums are insufficient.
Recommendations for Homeowners, Buyers, and Lenders
- Act Before September 30: Secure or renew NFIP policies now. Existing policies can transfer to buyers during a lapse.
- Explore Private Options: If in a high-risk area, compare private policies for better coverage (e.g., via state insurance
departments like Pennsylvania or Florida). - Monitor Updates: Check FEMA.gov or NAR’s flood insurance FAQs for real-time alerts. Advocacy groups like the National Association of Realtors (NAR) and National Association of Home Builders (NAHB) are urging immediate action to avoid disruption.
Reauthorization and Long-term Outlook
Congress has an opportunity to reform NFIP for sustainability, but repeated short-term fixes create uncertainty. The NFIP was set to be reauthorized in 2017 five years after the Biggert-Waters Act and the Homeowners Flood Insurance Affordability Act (HFIAA); however, Congress has kicked the can down the road with 33 short-term extensions.
Senators Bill Cassidy (R-LA) and Cory Booker (D-NJ) recently sent a letter with 46 questions to stakeholders asking what provisions would be most impactful. Also working with Cassidy and Booker on the initiative are Senators Elizabeth Warren (D-MA) and Tim Scott (R-SC). All Senators represent coastal states, and all were serving in Congress prior to the 2017 Reauthorization date.
FIRM’s Top Provisions for Reforming the NFIP
FIRM responded to the inquiry with a list of its proposed reforms that have remain unchanged since 2017:
- AFFORDABILITY – NFIP reform that focuses on affordability will limit premium rate increases, cap commissions paid to private insurers and discount premiums for low-income households based on local cost of living.
- MITIGATION – Increased funding for existing mitigation programs, expanded Increased Cost of Compliance (ICC) for policyholders, tax credits for mitigation efforts, and voucher/loan programs will reduce the losses in a flood event, address the repetitive loss problem, and contribute to the resiliency of all communities. Every $1 invested in mitigation saves $7.
- PROGRAM EXPANSION – Greater participation by those outside the 100-year floodplain with Preferred Risk Policies and enforcement for those within the 100-year floodplain spreads the risk.
- RATE STRUCTURE – Increase coverage limits for homes and businesses, enable residential properties to apply flood-proofing techniques and qualify for mitigation credits, and provide transparent rate setting and consistent rates for all properties including second homes and businesses.
- REDUCE PROGRAM COSTS – Cap compensation paid to Write Your Own companies who bear no risk, allow privatization that maintains affordability and requires a whole profile of risk–no cherry-picking, and remove severe repetitive loss properties from the program.
- RESILIENT COMMUNITIES – Improve the Community Rating System (CRS) and increase support for communities for effective floodplain management.