As peak hurricane season collides with a looming federal deadline, millions of homeowners may be left wondering how secure their flood coverage really is.
Unless Congress renews the National Flood Insurance Program (NFIP) by September 30, new policies can’t be issued and existing protection will be capped at just a fraction of its usual funding.
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The NFIP, administered by FEMA, provides most of the nation’s residential flood insurance. Standard homeowners’ policies generally exclude flood damage, making the program a critical safety net for millions of households.
Currently, the NFIP insures about 4.7 million properties nationwide, with coverage concentrated in states such as Florida, Louisiana, and Texas. Congress has extended the program more than 20 times since 2017, often for short periods, leaving long-term reform unresolved.
What happens if the program lapses?
If Congress does not reauthorize the NFIP by September 30:
- No new policies can be issued. This could directly impact homebuyers in flood zones, where lenders require coverage for federally backed mortgages.
- Renewals are still allowed, but coverage could be strained. FEMA can only access $1 billion to pay claims during a lapse – far less than the $30 billion borrowing authority it usually holds.
- Delays in claims are possible. In the event of a major flooding disaster, existing homeowners may face slower or reduced payments.
“Homeowners won’t lose their flood insurance overnight, but the program’s limited ability to pay claims could be devastating if a major storm hits during a lapse,” said Joel Scata, attorney with the Natural Resources Defense Council, in prior testimony.
Impact on existing homeowners
Current policyholders would remain insured, but FEMA’s restricted authority could limit payouts if widespread flooding occurs. With only $1 billion available during a lapse, a single major hurricane could exhaust funds, leaving claims unpaid until Congress acts.
This raises particular concern for homeowners along the Gulf Coast and Atlantic Seaboard, where peak hurricane season coincides with the program’s deadline.
Impact on home sales and housing market
Real estate professionals warn that a lapse could stall thousands of home sales. Mortgage lenders typically require flood insurance for properties in high-risk areas, and without the NFIP issuing new policies, closings may be delayed or canceled.
The National Association of Realtors reported that during previous NFIP lapses, even short ones, as many as 40,000 home sales were disrupted nationwide. That uncertainty can ripple through the broader housing market, creating additional stress for buyers, sellers, and renters in flood-prone regions.
What should affected homeowners do?
Experts say the best step homeowners can take right now is to stay informed. That means double-checking your flood insurance policy before the September 30 deadline and confirming renewal dates with your insurance agent. Homeowners should also be prepared for the possibility of slower claim payments if flooding occurs during a lapse.
For those in the middle of buying a home in a flood zone, the situation may be trickier. Because lenders typically require active coverage, some buyers could face delays in closing until Congress makes a decision.
The bottom line
For homeowners, a lapse could mean slower claim payments when they’re needed most. For buyers, it could put home purchases on hold altogether.
Whether you’re renewing a policy, shopping for your first home, or simply trying to protect your property during hurricane season, the uncertainty surrounding the NFIP shows how critical congressional action is to keeping families and markets secure.
