Overview
Flood insurance coverage worth $1.3 tn sits on the edge of expiring, with Sept 30 marked as the deadline. US Congress hasn’t agreed on an extension.
That means 4.7mn policyholders—homeowners, renters, small shops—risk losing access to protection.
And FEMA’s National Flood Insurance Program (NFIP), the taxpayer-backed scheme set up in 1968, can’t keep operating without that reauthorization.
The chances of a government shutdown have risen in the past few days as Democratic and Republican lawmakers struggle to reach a deal to provide more funding for the federal government, according to oddsmakers.
The House of Representatives has passed a temporary funding bill to avoid the shutdown, but it has stalled in the Senate, where it must overcome the 60-vote filibuster to become law.
Republicans hold a 53-47 majority, so it needs some bipartisan support, and Senate leaders remain divided about whether Republicans should make concessions with only four days until the shutdown may begin.
What happens if the program lapses?
For one, nobody can buy new flood insurance, and renewals won’t go through. Properties already covered keep their policy until the one-year term runs out, but nothing more.
Real estate deals in flood zones also grind to a halt.
Even worse, NFIP’s borrowing power from the Treasury drops from $30.425bn to $1bn, a drastic cut in its ability to pay claims.
That’s dangerous in a year already stacked with records: more than 4,000 flash flood warnings in 2025, the deadliest summer in decades for Texas when the Guadalupe River tore through communities, killing more than 130 people.
Flood Impact Data
| Metric | Value |
| Annual Flood Cost | $179.8bn – $496bn |
| Claims Outside High-Risk Areas | 32% |
| Counties Flooded Since 1999 | 99% |
| Homeowners with Flood Policies | 4% |
The Insurance Fairness Project calls the looming expiration a “step in the wrong direction at the worst time.”
Their spokesperson Jordan Haedtler says Congress’ constant failure to meet Sept deadlines creates uncertainty and delays relief right when disasters pile up.
Cuts to FEMA and NOAA, they argue, have already cost billions and made insurance harder to secure nationwide.
Now add a possible NFIP shutdown, and the country’s climate-driven housing crisis deepens.
Why it matters
Congress has until the end of September to pass legislation to fund the government. It appears unlikely that lawmakers will be able to pass a series of appropriations bills to provide funding for the entire fiscal year, meaning they will have to again rely on a continuing resolution for temporary funding. But Congressional leaders are at odds over what should be included in that bill.
Republicans control both the House of Representatives and the Senate, but the Senate filibuster, which requires 60 votes to advance bills, means the CR has to have some bipartisan support to pass.
Democrats are hoping to get some concessions on health care funding, but Republicans have pushed for a vote on a bill already passed by the House that Democrats do not view as adequate.
Flooding is expensive
The Joint Economic Committee pegged annual damage at anywhere between $179.8bn and $496bn.
Federal records show 32% of NFIP claims come from places not even classified high-risk. And yet, most U.S. homeowners never buy coverage.
99% of counties have flooded since 1999, but only 4% of households hold flood policies.
Private insurers price coverage higher still, often out of reach. FEMA caps payouts at $250,000 for residential properties and $500,000 for commercial buildings.
NFIP Debt and Borrowing
| Year/Status | Amount |
| Debt Forgiven (2017) | $16bn |
| Current Debt | $22.5bn |
“For years now, dysfunction in meeting September 30 deadlines has created uncertainty for NFIP and delays in disaster relief just as disaster season is intensifying,” said Jordan Haedtler, a spokesperson for the Insurance Fairness Project.
Federal cuts to FEMA and NOAA have already inflicted huge costs on communities and threatened the availability of insurance throughout the country.
“A lapse in the NFIP would make our climate-driven insurance and housing affordability crisis even worse,” he said.
Congress is staring down a potential lapse of the NFIP while lawmakers push new legislation to update the way FEMA manages flood maps.
The bill, titled the Improvement of Mapping, Addresses, Geography, Elevations and Structures (IMAGES) Act, was introduced in the House by Rep. Troy Downing, a Republican from Montana and former state insurance commissioner, alongside Rep. Vicente Gonzalez, a Texas Democrat.
It would require FEMA to refresh flood maps every five years and incorporate planimetric features—such as roads, structure footprints, rivers, and lakes—into insurance rate maps.
The measure also calls for FEMA to make its flood data public, opening access for uses beyond insurance: water management, map appeals, aviation safety, and fire prevention. Downing said this level of transparency and accuracy would help consumers gauge their flood risk more effectively and invest in prevention strategies.
The NFIP itself carries heavy debt
A $16bn portion was wiped clean in 2017, yet the ledger ballooned again to $22.5bn. This year alone it borrowed $2mn from Treasury to pay Hurricane Helene and Milton claims.
And hurricane season isn’t over. If a major storm makes landfall before Congress acts, claims could mount fast, leaving FEMA exposed.
Overlaying this with the broader political drama, the U.S. government edges toward a shutdown. By midnight, without a deal, federal funding halts.
Legislative Actions
| Action | Details |
| Senate Bill | Extends NFIP through Dec 31, 2026 |
| Short-term Extensions | 32 over past decade |
| Borrowing Capacity if Lapse | Drops from $30.43bn to $1bn |
Democrats push for health care protections—extensions of Affordable Care Act tax credits—while Republicans dig in against adding those measures. No compromise so far.
President Donald Trump plans to meet with congressional leaders at the White House. Schumer, Jeffries, Johnson, and Thune are all expected.
In a joint statement, Schumer and Jeffries said Democrats remain ready to negotiate “anywhere, anytime” to stop a shutdown.
They frame the moment as more than budget arithmetic: it’s about keeping government open while protecting families facing higher health care costs.
Whether flood victims, homeowners in fire zones, or anyone counting on federal disaster aid, the message is the same: time is running out, and Washington’s gridlock is leaving them exposed.
U.S. Senate moves to extend National Flood Insurance Program
A bill introduced in the U.S. Senate aims to extend the National Flood Insurance Program (NFIP) through Dec. 31, 2026. This move addresses the 32 short-term extensions the program has faced over the past decade.
The most recent extension, enacted in December 2024, is set to expire on March 14 at midnight unless Congress intervenes with new legislation or another short-term extension.
The House of Representatives passed the continuing resolution on March 11, but the Senate had not yet voted on the budget measure at the time of reporting.
Frequent short-term extensions undermine the NFIP’s ability to serve its 4.7 million policyholders, according to Louisiana Republican Senators Bill Cassidy and John Kennedy, who sponsored the bill.
Cassidy emphasized that an insurance program should provide certainty rather than face renewal every two months.
On March 13, Cassidy addressed the Senate, criticizing rising NFIP rates due to the adoption of Risk Rating 2.0.
He stressed the need to make flood insurance affordable while ensuring the program’s continuity.
If the program lapses at midnight, new policies would not be issued, and existing contracts would expire at the end of their one-year terms.
The NFIP’s borrowing capacity from the U.S. Treasury would also drop from $30.43 bn to $1 bn, according to the Congressional Research Service (CRS).
FAQ
Roughly 4.7mn policyholders, covering homeowners, renters, and small businesses in about 22,600 participating communities. The coverage pool totals $1.3tn, making NFIP the largest single flood insurer in the U.S. By scale, no private market player comes close, which means lapses hit markets hard, especially in coastal and riverine real estate transactions.
Immediate disruption follows. No new policies are issued. Renewals stall. Property sales in designated flood zones cannot close because federal law requires insurance in those areas for federally backed mortgages. Treasury borrowing authority shrinks from $30.425bn to $1bn, weakening FEMA’s capacity to process claims in the middle of hurricane season. The Insurance Fairness Project warns this could delay payouts when floods strike, worsening both human and economic fallout.
Flooding costs the U.S. $179.8bn to $496bn annually, according to the Joint Economic Committee. About one-third of NFIP claims come from outside high-risk zones, a reminder that risk is widespread, not confined to FEMA maps. Since 1999, 99% of U.S. counties have flooded, yet only 4% of homeowners carry flood coverage. Private insurers charge substantially higher rates, making NFIP the fallback for affordability, even though its caps—$250,000 for residences, $500,000 for commercial buildings—rarely cover full rebuilding costs.
The broader shutdown fight drives the standoff. Congress needs a continuing resolution to keep government open because appropriations bills for the fiscal year are nowhere near passage. Republicans, holding a 53–47 majority, want a clean bill stripped of Affordable Care Act tax credit extensions. Democrats are pushing the opposite, insisting those protections stay in. The Senate’s 60-vote filibuster threshold forces bipartisan buy-in, yet neither side seems willing to bend with days left on the clock.
Yes, reforms are on the table. The IMAGES Act would overhaul FEMA’s flood-mapping obligations by requiring updates every five years, including modern data layers like roads, building footprints, and waterways. It also mandates public release of FEMA’s flood datasets, unlocking uses beyond insurance: water planning, infrastructure safety, aviation routing, even wildfire management. Proponents argue this improves transparency and helps communities pre-invest in mitigation instead of reacting after the fact. Critics note FEMA has struggled to maintain existing maps, so implementation could lag without new funding.
The program’s long-term debt is $22.5bn even after Congress forgave $16bn in 2017. NFIP borrowed $2mn this year to meet claims tied to Hurricanes Helene and Milton. And the season isn’t done. If a Category 4 storm makes landfall before renewal, FEMA could face multi-bn claim volumes with only $1bn in Treasury borrowing capacity if authorization lapses. That scenario would trigger delays, political fallout, and potentially fresh congressional bailouts. For insurers and reinsurers watching U.S. catastrophe exposure, NFIP’s solvency signals matter as much as its policy volume.
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AUTHOR: Nataly Kramer – Lead Insurance Editor at Beinsure Media
