The National Flood Insurance Program (NFIP) has officially lapsed as of October 1, after Congress failed to pass an extension before the program’s funding expired. The shutdown comes just as hurricane season reaches its most dangerous point, potentially exposing millions of Americans to flood risks without coverage and bringing thousands of home sales to a standstill.

Lawmakers had passed a short-term extension earlier this year, but no long-term solution was reached before the September 30 deadline. With no reauthorization in place, the Federal Emergency Management Agency (FEMA) — which oversees the NFIP — can no longer issue new flood insurance policies or renew existing ones. However, FEMA says it will continue paying claims on active policies using current available funds.

Closings Delayed, Transactions Stalled

The expiration of the NFIP is already creating waves in the real estate sector. According to the National Association of Realtors (NAR), roughly 1,300 home sales per day — or around 40,000 per month — are at risk of delay, especially in flood-prone areas where insurance is mandatory for mortgage approval.

NAR is calling for not just an extension, but a full overhaul of the program. In a recent letter to Congress, the group recommended comprehensive reforms including updated flood mapping, stronger mitigation investments, and revised pricing models. Based on its research, NAR says NFIP plays a vital role in facilitating approximately 500,000 property transactions annually.

Warnings Ahead of Deadline Went Unheeded

Despite repeated appeals from state officials and insurance industry leaders, Congress allowed the program to expire. New York Assemblywoman Pamela Hunter, who serves as president of the National Conference of Insurance Legislators (NCOIL), warned in the final days before the deadline that failing to extend the NFIP would be a dangerous misstep.

“We are in the thick of hurricane season,” Hunter said. “Letting this program lapse, even temporarily, puts families, businesses, and entire communities at risk. A long-term fix is essential, but in the meantime, Congress needed to act.”

Jimi Grande, senior vice president of federal affairs for the National Association of Mutual Insurance Companies (NAMIC), echoed those concerns before the expiration date. “Homeowners need this protection now more than ever. Congress cannot afford to wait,” he said.

After the deadline passed, NAMIC President and CEO Neil Alldredge warned that the consequences of inaction will escalate daily. “With two months left in hurricane season, each day this program remains inactive puts more Americans at risk of catastrophic losses,” he said.

Alldredge also criticized systemic failures, including outdated flood maps and flawed subsidy structures that have led to risky development in vulnerable zones. “Many Americans did the right thing by buying flood insurance. They shouldn’t be left unprotected because Congress failed to act.”

Insurance Industry Sounds the Alarm

Other voices from the insurance industry joined the call for swift congressional action. Sam Whitfield, senior vice president of federal government relations at the American Property Casualty Insurance Association (APCIA), emphasized that the program lapse is also disrupting mortgage closings.

“Without flood coverage, many buyers can’t close on their homes. This isn’t just an insurance issue — it’s a housing crisis in the making,” Whitfield said.

Lizzy Price, spokesperson for the Insurance Fairness Project, tied the situation to broader climate-related pressures. “The NFIP lapse only adds to the growing insurance instability we’re seeing across the country. As extreme weather becomes more frequent, access to affordable flood insurance is more important than ever,” she said.

Decade of Delays and Short-Term Fixes

The NFIP has faced repeated short-term reauthorizations — more than 30 since 2017 — without comprehensive reform. The latest extension was passed in March 2025, just after FEMA borrowed $2 billion from the U.S. Treasury to help pay for a surge in claims following Hurricanes Milton and Helene in 2024.

FEMA later said the volume of claims had nearly exhausted NFIP’s reserves. According to the Congressional Research Service, the program had just $615 million in available funds as of January 25.