Just six months after Congress approved a short-term extension, the National Flood Insurance Program (NFIP) officially lapsed on October 1—right at the peak of hurricane season. The expiration is expected to cause lapses in coverage for policyholders whose contracts are ending, while also stalling tens of thousands of home sales and real estate closings nationwide.
The program was set to sunset at the end of September as lawmakers failed to reach an agreement on a federal spending bill, which also faced an October 1 deadline. As a result, NFIP operations requiring new authorization were halted, despite widespread calls for action from state officials, insurance groups, and real estate industry stakeholders.
FEMA: Claims Still Paid, But No New Coverage
Although the Federal Emergency Management Agency (FEMA), which oversees NFIP, said it will continue to process and pay valid existing claims using available funds, no new flood insurance policies can be issued during the lapse. Policies that reach expiration will not be renewed, per FEMA’s website.
According to the National Association of Realtors (NAR), this lapse could stall approximately 1,300 property sales per day—totaling around 40,000 closings each month. NAR has called for a long-term NFIP reauthorization that includes critical reforms such as modernized flood maps, risk mitigation strategies, and updates to pricing structures. Their data shows that NFIP plays a key role in supporting roughly 500,000 home sales every year.
Urgent Calls for Reauthorization Ignored
Despite warnings ahead of the deadline, Congress failed to enact a temporary or permanent solution. On the eve of the program’s expiration, New York State Assemblywoman Pamela Hunter—president of the National Conference of Insurance Legislators (NCOIL)—urged lawmakers to act before leaving homeowners and communities exposed during hurricane season.
“Congress must act swiftly to prevent any lapse in the NFIP,” Hunter said. “Long-term reauthorization is essential, but even a short-term fix is necessary to avoid unnecessary risk to families, businesses, and entire communities.”
Jimi Grande, senior vice president of federal and political affairs for the National Association of Mutual Insurance Companies (NAMIC), echoed similar concerns ahead of October 1, saying that “Congress cannot allow” NFIP to lapse during one of the most dangerous times of year for flooding.
Following the expiration, NAMIC President and CEO Neil Alldredge stated, “There are still two full months left in hurricane season, and every day more Americans are left unprotected due to congressional inaction.”
Alldredge also criticized longstanding flaws in the program, citing outdated flood maps, hidden subsidies, and policies that incentivize construction in flood-prone regions. “Millions of Americans are at risk. Many did the right thing by purchasing flood insurance—and they shouldn’t be punished because Congress can’t follow through,” he added.
Industry Groups Sound the Alarm
The American Property Casualty Insurance Association (APCIA) also called for immediate congressional action, warning that the lapse will interfere with new mortgage approvals and leave property owners exposed. Sam Whitfield, APCIA’s senior vice president of federal government relations, said a long-term solution is urgently needed to restore stability to the housing and insurance markets.
Lizzy Price, a spokesperson for the Insurance Fairness Project, added in a statement, “When Congress cuts funding, families and communities bear the burden. The NFIP lapse adds to an already growing insurance crisis fueled by climate change.”
History of Short-Term Fixes and Funding Challenges
Since 2017, NFIP has been extended more than 30 times, often through short-term measures. The most recent extension came in March 2025, following FEMA’s decision to borrow $2 billion from the U.S. Treasury to pay claims stemming from the destructive 2024 hurricane season—including Hurricanes Milton and Helene.
At that time, FEMA reported that the volume of claims from those storms had drained the program’s reserves, which are funded by premiums collected from policyholders.
According to the Congressional Research Service, NFIP had approximately $615 million in cash available for claims as of January 25, but that total has been shrinking due to recent payouts.