October 1, 2025 NFIP Lapse: What Now?

Since its inception in 1968, the National Flood Insurance Program (NFIP) has been a foundation for U.S. disaster recovery efforts, helping communities rebuild after floods and establishing better floodplain management standards. Each lapse underscores the importance of a long-term, sustainable reauthorization that avoids disrupting coverage for millions of Americans.

September 30th, 2025, was the last day of authorization for the National Flood Insurance Program (NFIP). This isn’t the first time the NFIP has been halted. The insurance industry has seen it before. Congress.gov reports that 33 short-term reauthorizations have been needed since 2017, with multiple program lapses in the past, while Congress works out budgets and funding for the program, including, more recently:

• January 20-22, 2018

• February 8, 2018

• March 23, 2024

Historically, Congress has restored funding after short interruptions. However, any lapse, especially during hurricane season, creates significant risk and uncertainty since the NFIP loses its ability to operate normally, even though existing coverage remains in place. In addition, NFIP lapses tend to impact the lending market.

So here’s what you, the insurance professional, need to know.

Timing Matters

Effective October 1, 2025, funding for the NFIP has lapsed. The NFIP cannot authorize new or renewal policy issuance. If a completed NEW application with payment or a renewal payment was received by the NFIP on or before the lapse (i.e., September 30, 2025), the covered property will be protected in the event of a flood after that date and until the policy expiration.

Claims

Claims for active policies will continue to be paid as long as FEMA has available funds. Clients can continue to file claims as usual through their insurance representative or directly with the NFIP, although they may experience slower response times and delayed payment processing. If the client’s coverage lapses during the shutdown, the policy cannot be renewed, and the client will not have coverage. Again, this is not the best scenario during hurricane season.

Lending and Private Flood

Lenders processing federally backed loans may continue processing loans without flood insurance requirements. However, the lender may still require flood insurance. For borrowers caught in this gap, private flood insurance markets remain an option. The NFIP reauthorization lapse does not affect private flood availability, and many insurers continue to offer comparable or even broader coverage. For some clients and their insurance agents, this may be an opportunity to explore private flood products that meet their mortgage lender’s requirements and maintain continuous coverage.

What Happens Next

Once Congress agrees on the budget and NFIP funding resumes, any new policy applications or renewals submitted with premiums since the lapse will be processed. If Congress grants a retroactive reauthorization, these submissions will be backdated to the date they were received, and any claims that could have been covered will be processed accordingly. Without retroactive reauthorization, new policies and renewals submitted during the lapse will take effect on the date the NFIP is reauthorized (subject to applicable waiting periods), and only losses occurring after that date will be considered insurable.

Insurance Professional’s Education Requirements

Even though the NFIP’s authority to issue or renew policies is paused, insurance professionals must continue to meet their licensing and continuing education (CE) requirements. Those who sell flood insurance are typically required to complete flood-specific training to maintain compliance with state regulations. These professional obligations remain in effect regardless of the NFIP’s operational status.