The National Flood Insurance Program’s statutory authority lapsed at 12:01am on 1 October 2025, when the federal government shut down. FEMA cannot issue new NFIP policies, renew expiring ones, or approve requests to increase coverage until Congress reauthorises the programme.
For most people this is abstract. For anyone buying a house in a Special Flood Hazard Area, it is the reason their closing did not happen this week.
What Still Works, and What Does Not
Still working:
- Policies already in force remain valid through their normal expiration date
- Claims under those existing policies can still be adjusted and paid, so long as FEMA has funds available
- Payments already in process continue
Not working:
- No new policies
- No renewals of policies expiring during the lapse
- No increases to existing coverage limits
The renewal problem is the sharp one. NFIP policies carry a 30-day grace period after expiration, which absorbs a short lapse. A long one does not fit inside it, and a policy that lapses entirely loses its continuous-coverage status — which matters for pre-FIRM subsidised rates and for certain grandfathered rating.
Why Closings Stop
Federally backed mortgages — which is most mortgages — require flood insurance on properties in a Special Flood Hazard Area. No policy, no closing.
There are two partial workarounds, and both have limits.
Assumption of the seller’s policy. NFIP policies are assumable. If the seller has one in force, the buyer can take it over. This works, and it is the cleanest route during a lapse, but it only helps where the seller is already insured.
Private flood insurance. The private flood market has grown substantially and is not affected by the lapse at all. Lenders accept private flood policies that meet the mandatory purchase requirement. Coverage is often broader than the NFIP’s $250,000 building / $100,000 contents caps, and pricing can be competitive on newer or better-elevated properties.
The catch on private flood is the reverse of the NFIP’s: it is individually underwritten, so a property the NFIP would rate mechanically may be declined or heavily loaded by a private carrier.
This Has Happened Before, Repeatedly
The NFIP has not had long-term reauthorisation since 2017. It has been extended dozens of times on short-term continuing resolutions, and it has lapsed on several previous occasions.
That pattern is the actual story. A programme covering roughly 4.7 million policies and underpinning the mortgage market in every coastal and riverine county in the country has been running on rolling extensions for eight years, and its continued operation is now routinely bundled into unrelated budget fights.
The lapse was ultimately resolved when the shutdown ended in November, with the reauthorisation applied retroactively to 1 October. That retroactivity fixed the paperwork. It did not give anyone back the six weeks.
What to Do If You Are Caught In One
- Check your NFIP expiration date now, not when the notice arrives. If it falls inside a lapse window, the 30-day grace period is your buffer.
- Get a private flood quote in parallel. Even if you stay with the NFIP, knowing the private number is useful — for many properties it is now cheaper.
- If you are buying, ask whether the seller’s policy can be assumed. Your agent may not raise it.
- Do not assume you are outside a flood zone because you are outside the mapped one. Roughly a quarter to a third of NFIP claims come from outside high-risk areas, and standard homeowners policies exclude flood entirely.
Sources: Congressional Research Service, “What Happens If the National Flood Insurance Program (NFIP) Lapses?”; FEMA, Congressional Reauthorization of the NFIP
Flood is excluded from every standard policy — see what is and is not covered in our home insurance guide.