The ongoing government shutdown has already begun to have an adverse impact on the National Flood Insurance Program (NFIP). Both authorization and funding for the NFIP expired on September 30, the end of fiscal year (FY) 2025.

The currently-pending (and now multiple times defeated) continuing resolutions (CRs) would extend authorization and funding for the NFIP, but until a CR (or, more unlikely, an actual funding bill) is enacted, the NFIP is stopped in its tracks.

As a result, the NFIP cannot renew or issue new flood insurance policies, which puts at risk some 1,300 real estate closings per day. Also likely to be impacted are claims payments—a huge issue during hurricane season. The only NFIP policy renewals that can be processed are those that were billed prior to October 1 and paid within the 30-day grace period.

NFIP experts say that property insured under the NFIP remains covered, but note that worried policyholders (and there are some 4.7 million of them) are likely to contact their agents/advisors to find out the status of their insurance/insured property.

Also adversely impacted is FEMA’s (Federal Emergency Management Agency’s) ability to borrow—FEMA borrowing authority drops precipitously from $30.4 billion to $1 billion during the shutdown. This will impact the agency’s ability to pay new NFIP claims. That is a worry as we are at the peak of hurricane and wildfire season.

Other NFIP activities are also hurt by the shutdown—for example, projects like identifying and mapping flood hazards are also halted during the government shutdown.

Experts point out that some NFIP policyholders worried about whether their property is or will remain covered may look into acquiring private flood insurance to replace their expired (and unable to be renewed) NFIP coverage. This also has significant implications. Leaving the NFIP is considered a break in continuous coverage, experts say, and thus could destroy a policyholder’s grandfathered status should they decide to go back to the NFIP after the government shutdown ends and the NFIP is reauthorized and funded.

On the good news side of the equation, crop insurance is not impacted—crop insurance is funded by mandatory federal spending and thus not caught up in the shutdown caused by the expiration of discretionary funding.

Prospects: Most Washington insiders are now predicting that this will be a prolonged government shutdown—some say they do not expect the government to reopen until next month. In the meantime, the flood insurance situation is worrisome, and gets only more so if and when hurricanes (or other natural disasters) develop.

NAIFA Staff Contact: Mike Hedge – Senior Director – Government Relations, at mhedge@naifa.org