The National Flood Insurance Program (NFIP) officially expired on October 1 after Congress failed to pass an extension, halting the issuance and renewal of flood insurance policies just as the U.S. enters the most dangerous part of hurricane season.
The program’s lapse coincided with the end of the federal fiscal year on September 30, as lawmakers were unable to finalize a budget deal in time. As a result, FEMA, which oversees the NFIP, announced it can no longer issue new policies or renew existing ones, though it will continue processing claims from active policies using available funds.
Impact on Home Sales and Closings
According to the National Association of Realtors (NAR), roughly 1,300 real estate transactions per day—about 40,000 per month—will be delayed or derailed due to the lapse. Many mortgage lenders require active flood insurance in high-risk areas, making NFIP essential for closing sales in those regions.
NAR urged lawmakers to pursue a long-term reauthorization of the program, calling for reforms like updated flood maps, better mitigation measures, and modernized pricing. The association notes that around 500,000 home sales annually depend on the program.
Warnings Ignored Ahead of Shutdown
Despite growing pressure from the insurance industry and state officials, Congress failed to act before the program expired. New York Assemblywoman Pamela Hunter, who also serves as president of the National Conference of Insurance Legislators (NCOIL), stressed the urgency in the days leading up to the deadline.
“We are at the height of hurricane season. A gap in NFIP coverage puts lives, homes, and businesses at risk,” Hunter said. “A permanent fix is long overdue, but a temporary extension would have at least offered protection for now.”
Jimi Grande, a senior executive at the National Association of Mutual Insurance Companies (NAMIC), had similarly warned that a lapse would leave homeowners exposed. Following the program’s expiration, NAMIC President Neil Alldredge emphasized that the danger is far from over.
“With two months left in hurricane season, thousands of Americans are now at greater risk,” Alldredge said. “The failure to update flood maps and reduce risky development has already put millions in harm’s way. Now, those who took steps to protect themselves through the NFIP are being let down.”
Industry Urges Swift Action
Insurance groups are continuing to call on lawmakers to reinstate the NFIP immediately. Sam Whitfield, senior vice president of federal government relations at the American Property Casualty Insurance Association (APCIA), said the lapse will interfere with home financing and threaten Americans’ most valuable assets.
“The inability to close on new mortgages or maintain coverage puts countless families at risk,” Whitfield said.
Lizzy Price, a spokesperson for the Insurance Fairness Project, said the NFIP lapse adds to broader challenges in the insurance industry. “With climate change worsening flood risks, cutting off access to affordable flood insurance only makes the crisis worse,” she said.
A Pattern of Short-Term Fixes
Since 2017, Congress has passed over 30 short-term extensions of the NFIP without implementing lasting reforms. The most recent extension, passed in March 2025, came shortly after FEMA borrowed $2 billion from the U.S. Treasury to cover a surge in claims from Hurricanes Milton and Helene in 2024.
FEMA later said those storms had exhausted the program’s reserves. As of January 25, the NFIP had just $615 million in available funds, according to the Congressional Research Service.
