Impact of the Likely Federal Government Shutdown on the NFIP and FCIP
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September 30, 2025 4:30 p.m.
Negotiations are still taking place on Capitol Hill to avert a federal government shutdown. However, absent an eleventh-hour deal we’re headed toward a partial shutdown at midnight that will impact the NFIP and FCIP (to a much lesser extent), and various federal agencies and services.
National Flood Insurance Program (NFIP)
The NFIP, which is managed by the Department of Homeland Security’s Federal Emergency Management Agency (FEMA), was last extended on March 15, 2025, by a continuing resolution that extended its authorization until September 30, 2025. If NFIP authority lapses at midnight, FEMA still has authority to ensure payment of valid claims with the funds it has on hand. Existing policies are allowed to remain in effect until they expire (i.e., the renewal date plus a 30-day grace period). Renewal of policies is allowed if the application was received prior to September 30th and the premium is received within the 30-day grace period. All other renewals must wait for reauthorization by Congress. Additionally, the federal government’s requirement to purchase flood insurance if the property is in a flood zone is suspended and lenders can decide whether to make loans in flood hazard zones. Private flood insurance may be available for those policyholders where the lender decides that coverage is needed. FEMA has historically sent out a memo (click here December 2024 guidance) prior to a lapse in the program, but nothing has been circulated at this time.
A broad coalition of organizations representing the insurance, real estate and banking industries sent this letter to Congressional leaders yesterday, urging their quick action to extend the NFIP. The Big “I” will continue to advocate for NFIP reauthorization, either through a continuing resolution or other avenue.
Federal Crop Insurance Program (FCIP)
During a federal government shutdown, the Risk Management Agency (RMA) does not completely shut down due to mandatory funding, but operates in a limited, essential capacity focused on processing approved insurance providers’ financial operations, continuing program payments, offering crop and livestock insurance policies, and maintaining the Federal crop insurance price support function. Other RMA activities and services are reduced or cease, similar to other non-essential government functions during a shutdown.