The National Flood Insurance Program (NFIP) will expire on Sept. 30, leaving 5 million American homeowners without flood insurance, unless Congress acts to extend coverage. Rep. Troy Carter (D-La.) recently introduced a bipartisan bill to extend the NFIP’s federal authorization until Dec. 31, 2026.

The multi-year reauthorization would mark a significant departure from a cycle of 33 short-term NFIP extensions since 2017.

The FEMA-run program provides subsidized flood insurance via its network of partner insurance companies. NFIP coverage is available in high-risk areas where private insurers are unable to offer affordable coverage while remaining solvent.

Four Democrats and two Republicans, representing the flood-prone states of Florida, Louisiana, Mississippi, New Jersey, and Texas, co-sponsored the bill.

What happens if the NFIP expires

Existing policies would continue to pay out if the NFIP expires, but new policies and renewals would cease. Standard home insurance doesn’t pay for flood damage, but some private insurers offer separate coverage.

Finding comparably priced private coverage in high-risk states like Florida or Louisiana would “certainly be a challenge,” said Mallory Mooney, director of sales and service at Insurify.

In 2024, Florida home insurance rates climbed to a staggering annual average of $14,140, according to Insurify data. Increasingly severe and frequent weather events fueled the state’s insurance crisis.

About 1.7 million, or more than one-third, of NFIP policyholders live in Florida. The average risk-based cost of NFIP flood insurance in Florida is $1,363 annually, but the program subsidizes some policyholders.

Representatives from Florida, Louisiana, Mississippi, New Jersey, and Texas co-signed the bill to extend NFIP funding. Home insurance rates have already increased significantly in these states over the past year, influenced by rising climate risk.

Without NFIP subsidies, homeowners in flood hazard areas may be unable to afford premiums or find private insurers willing to cover their property.

Mortgage lenders generally require flood insurance for high-risk properties.

Losing NFIP coverage could further hamper the housing market, which saw its largest month-to-month decline in sales since 2022 last March. NFIP policies are essential to facilitating 41,300 home sale closings per month, according to an estimate from the National Association of REALTORS (NAR).

What’s next? How homeowners can prepare

The government typically chooses to extend the NFIP, said Mooney, so homeowners with a policy through the program will likely be able to renew their coverage next year. “That said, we never count on Congress to vote one way or another.”

Homeowners who want to prepare for a lapse in the NFIP’s federal authorization can check their flood zone through FEMA’s flood risk tool and buy NFIP coverage before the Sept. 30 deadline. NFIP policies take effect 30 days after purchase.

Property owners can also estimate a budget for private flood insurance by requesting quotes from multiple insurance companies.

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