- As of April 2026, 86% of high-risk US properties lacked National Flood Insurance Program coverage, while approximately 13 mn high-risk properties were located outside FEMA’s designated special flood hazard areas.
- NFIP policies declined from 5.5 mn in 2010 to 4.5 mn in 2026, although private flood insurance expanded and represented 14% of all flood insurance policies in 2025.
- GAO recommended four congressional actions to increase flood insurance coverage, including broader risk assessments, public access to property-level flood data, mandatory insurance quotes and higher NFIP coverage limits.
Most US properties exposed to significant flooding risk lack coverage under the National Flood Insurance Program (NFIP), according to report from the Government Accountability Office (GAO), which calls for changes to federal insurance requirements and flood risk assessments.
As of April 2026, approximately 86% of properties classified as high-risk did not have NFIP coverage. The findings expose limitations in the federal system designed to encourage flood insurance purchases, particularly for properties located outside officially designated flood hazard areas.
The number of NFIP policies declined from 5.5 mn in 2010 to 4.5 mn in 2026. Growth in private flood insurance helped offset the decline, with private policies accounting for 14% of all flood insurance policies in 2025. The expansion of private coverage has not eliminated the substantial gap between properties exposed to flooding and those carrying federal flood insurance.
GAO found that mandatory insurance requirements remain the principal factor influencing whether property owners purchase coverage.
An estimated 43% of properties within Federal Emergency Management Agency (FEMA) special flood hazard areas (SFHAs) had flood insurance, compared with just 2% of properties outside those zones.
The difference is significant because the federal flood maps used to determine compulsory coverage do not account for every source of flooding. FEMA’s designations primarily reflect riverine and coastal flood hazards, leaving substantial exposure associated with heavy rainfall outside the mandatory insurance framework.
Based on property-level risk estimates from First Street, a flood risk modeling company, GAO calculated that approximately 13 mn high-risk properties are located outside FEMA’s designated special flood hazard areas.
These properties may face considerable flood exposure without being subject to federal mortgage-related insurance requirements. Their exclusion from designated zones also creates challenges for communicating risk to homeowners who may assume that properties outside mapped floodplains are relatively safe.
Flooding remains the most frequent, costly and destructive natural disaster in the United States, according to GAO, with both its frequency and severity increasing in recent years. The financial consequences are reflected in rising claims under the federal insurance program.
Between 1980 and 2004, NFIP paid an inflation-adjusted annual average of $1.2 bn in flood claims. Since that period, average annual claims have reached $4.8 bn.
Flooding in 2024 generated approximately $9 bn in NFIP claims, including about $7 bn associated with Hurricane Helene. In July 2025, flooding in Central Texas caused 139 deaths and resulted in more than $31 mn in NFIP claims.
Insurance coverage helps homeowners, businesses and communities absorb these losses and finance recovery. GAO noted that households and businesses with insurance generally recover more quickly and more fully following natural disasters than those without comparable financial protection.
Congress established NFIP in 1968 to reduce the increasing federal costs of repairing flood-damaged homes and commercial properties. Administered by FEMA, the program was designed to make flood insurance available, encourage participation and support local efforts to identify and manage flood exposure.
Communities participating in NFIP must adopt and enforce minimum floodplain management regulations and construction standards before their residents can obtain policies through the program. FEMA’s flood maps provide the foundation for these local requirements.
The program has nevertheless faced persistent financial difficulties. GAO placed NFIP on its High Risk List in 2006 because premium revenue was considered highly unlikely to cover claims costs, particularly following catastrophic flooding.
Although FEMA has introduced measures intended to improve the program’s financial position, Congress has not enacted the broader reforms needed to address all of its structural challenges.
The requirement applies to qualifying properties in communities participating in NFIP. Covered mortgages include loans issued by federally regulated lenders, loans made, insured or guaranteed through the Federal Housing Administration, US Department of Agriculture or Department of Veterans Affairs, and mortgages purchased by Fannie Mae or Freddie Mac.
A 2019 interagency rule issued by federal financial regulators also requires lenders to accept qualifying private flood insurance policies as an alternative to NFIP coverage when satisfying the mandatory purchase requirement.
The effectiveness of this system depends heavily on the boundaries established by FEMA’s floodplain maps.
An SFHA represents land expected to be inundated during a flood event with a 1% probability of occurring or being exceeded in any given year. Over a 30-year mortgage period, that level of annual risk corresponds to a cumulative probability of at least 26%.
FEMA primarily relies on information about flooding from rivers and coastal waters when determining these areas. Heavy rainfall and other sources of flooding are not fully represented in the designations used for mandatory insurance purchases.
GAO’s analysis indicates that the existing purchase requirement substantially increases the likelihood that property owners will maintain coverage within designated areas. Its geographical restrictions, however, leave millions of high-risk properties outside the compulsory insurance system.
Before 2021, FEMA calculated flood insurance premiums primarily using its Flood Insurance Rate Maps. Under that system, some property owners qualified for discounted subsidized rates because their buildings were constructed before FEMA mapped the surrounding area.
Other policyholders retained grandfathered premium discounts when revised flood maps moved their properties into higher-risk zones that otherwise would have resulted in higher insurance costs.
FEMA began introducing Risk Rating 2.0 in October 2021, replacing the previous approach with a methodology intended to align premiums more closely with the flood exposure of individual properties.
Rather than relying principally on broad geographical flood zones, Risk Rating 2.0 incorporates additional sources of flooding, information from commercial catastrophe models and the replacement cost value of insured properties.
New NFIP policyholders were required to pay full-risk premiums under the methodology beginning October 1, 2021. Existing customers renewing their policies could initially opt into the system if it produced lower premiums.
On April 1, 2022, FEMA began transitioning all existing NFIP policies toward full-risk pricing as they came up for renewal.
Federal law generally limits annual increases for renewing policyholders. For most NFIP policies, FEMA cannot increase premiums by more than 18% annually.
The transition nevertheless resulted in higher costs for some property owners, intensifying affordability concerns and contributing to decisions to discontinue coverage.
GAO identified affordability as an issue that must be considered alongside efforts to expand insurance participation. The agency has previously recommended that any financial assistance designed to make flood coverage more affordable should be based on household means and explicitly reflected in the federal budget.
It has also recommended removing barriers that limit participation by private flood insurers, allowing additional insurance options to contribute to broader protection against flood losses.
The October 2026 report proposes four further actions for congressional consideration, all of which would require new statutory authority.
- First, Congress could revise the criteria used to determine mandatory flood insurance purchases so that assessments incorporate all sources of flood risk, rather than relying on the existing geographical designations.
- Such a change could extend insurance requirements to additional properties exposed to flooding but currently excluded from FEMA’s special flood hazard areas.
- Second, GAO recommended directing FEMA to make property-level flood risk information publicly available. Greater access to detailed assessments could help owners understand risks that are not necessarily apparent from existing floodplain maps.
- Third, lenders could be required to provide flood insurance quotes to borrowers with federally backed mortgages before closing. GAO identified this as a potential way to communicate the need for coverage, including to borrowers who would otherwise have limited information about insurance costs and exposure.
- Fourth, Congress could increase NFIP coverage limits. Higher limits could allow policyholders to purchase protection more closely aligned with the financial losses their properties might sustain during a flood.
Together, the proposals address the geographical limitations of mandatory coverage, inadequate access to risk information, consumer awareness and the amount of insurance available through the federal program.
GAO developed its findings through an examination of federal insurance data, property-level flood risk estimates, stakeholder consultations and field research.
The agency analyzed FEMA records covering NFIP policies from 2008 through 2026 and National Association of Insurance Commissioners data on private flood insurance from 2018 through 2025. It also used property-level estimates from First Street to assess the distribution of flood exposure relative to FEMA’s official hazard areas.
GAO’s recommendations would require congressional action to change the legal basis for mandatory insurance determinations, expand public access to property-level risk information, establish additional lender obligations and raise NFIP coverage limits. The agency also continues to support means-based affordability assistance and measures to remove obstacles to private flood insurance participation.
