Democrats risk flood insurance lapse as shutdown fight tests NFIP extension

With the Sept. 30 government funding deadline approaching, Democrats risk a lapse in the National Flood Insurance Program if they do not back a House-passed spending bill that would extend NFIP. The White House backs the continuing resolution approved by House Republicans, arguing it would avert a shutdown while preserving NFIP coverage during peak hurricane season. Administration officials said the NFIP extension was included in the current package because of the program's urgency for millions of homeowners and renters.

With the Sept. 30 deadline looming, administrators say a lapse could stall NFIP operations, complicating mortgage closings in flood-prone markets. The agency emphasizes that flood insurance remains a requirement for many home loans in flood zones, meaning a gap could slow or halt thousands of closings each week. The White House and FEMA stress that the risk grows at a moment when storms pose real threats across several states.

Administration figures say a lapse in NFIP authorization could disrupt about 1,300 property sales every day and roughly 40,000 closings in a month when mortgage lending often requires flood coverage. More than 400,000 policies are set to expire in October. Officials say about 152,000 of those have been prepaid, but more than 250,000 households could lose coverage if the program stalls. If lawmakers fail to strike a deal, FEMA would be barred from selling or renewing flood insurance policies starting Oct. 1, a gap that could leave homeowners in limbo as hurricane season intensifies.

FEMA currently has about 2.6 billion dollars available to pay valid claims, including around 1.5 billion from the NFIP fund and 1.1 billion in reserves. Administration officials cautioned that the agency would be unable to borrow additional money from the Treasury if a major disaster pushes reserves to the limit. The NFIP currently serves about 4.5 million policyholders nationwide. The National Association of Home Builders said past disruptions of the NFIP have caused immediate and widespread negative impacts on property sales, home values and consumer confidence.

NFIP has a long history of stopgap extensions. Since 2017 Congress has reauthorized the program more than 30 times, often through short-term measures. Lawmakers have typically made coverage retroactive to prevent permanent gaps, but even brief lapses have stalled real estate closings and left homeowners in limbo. The program currently serves about 4.5 million policyholders.

On Capitol Hill, House Republicans have pressed to fund the government through a continuing resolution that would also extend NFIP, while Democrats argue broader spending fights. Senate Democrats have not signaled support for the House plan. White House officials have warned that a funding lapse could carry steep consequences for homeowners, the housing market and disaster relief. The two sides show little movement as the deadline approaches, with lawmakers using procedural votes and private exchanges to press their positions without a breakthrough.

Policyholders and builders emphasize the stakes as hurricane season continues. The NFIP is the primary lender-backed option for flood coverage in many regions, and lapses could raise the risk of stalled home sales, higher borrowing costs and slower recovery after storms. Officials say a timely extension would reduce uncertainty and maintain continuity for homeowners, lenders and insurers alike. The outcome of the funding fight will determine whether households can lock in flood coverage as the calendar turns to October, avoiding a disruption that could amplify homeowners' financial vulnerability during a volatile season.