Shutdown could lapse flood insurance, White House warns
The National Flood Insurance Program, which covers more than 4.7 million policies representing about $1.3 trillion in coverage and supports nearly 500,000 home sales annually, is set to expire Tuesday, a lapse that could halt new policies and delay roughly 1,300 property sales per day (about 40,000 closings a month) where flood insurance is required for mortgages. The White House warns more than 400,000 NFIP policies are set to expire in October—with about 152,000 prepaid leaving over 250,000 households potentially losing coverage—and says FEMA has roughly $2.6 billion in reserves to pay claims but could not borrow Treasury funds if a major disaster exhausts those reserves.
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🔍 Key Facts
- The National Flood Insurance Program (NFIP) is set to expire, which would halt issuance of new policies and could block some home loans in areas that require flood insurance.
- About 1,300 property sales per day — roughly 40,000 closings per month — in areas where flood insurance is required could be disrupted if the program lapses.
- The NFIP supports nearly 500,000 home sales annually; roughly 14,800 monthly closings in Florida and about 3,500 in Texas depend on NFIP flood insurance.
- More than 400,000 NFIP policies are set to expire in October; about 152,000 of those are prepaid, leaving over 250,000 households potentially losing coverage.
- The NFIP currently covers over 4.7 million policies representing about $1.3 trillion in coverage.
- FEMA has approximately $2.6 billion available to pay valid flood claims ($1.5 billion in the National Flood Insurance Fund plus $1.1 billion in reserves), but officials warn the agency could not borrow additional Treasury funds if a major disaster exceeds those reserves.
- Background: the NFIP was created in 1968, includes about 22,500 participating communities, had its last long-term reauthorization in 2012, and has been extended through 33 short-term reauthorizations since 2017.
📍 Contextual Background
- Social Security benefits are funded through mandatory spending, meaning the program's funding is provided without an annual expiration and does not require yearly appropriations to continue benefit payments.
- The Social Security Administration's contingency plans provide that in the event of a lapse in appropriations the agency will follow those plans and beneficiaries would continue receiving Social Security, Social Security Disability Insurance (SSDI), and Supplemental Security Income (SSI) payments.
- The Government Employee Fair Treatment Act of 2019 provides that government employees automatically receive back pay after a government shutdown.
- During a U.S. federal government shutdown, active-duty military personnel and deployed National Guard members must continue to perform their assigned duties but their pay is delayed until the shutdown ends.
- Republicans and Democrats were engaged in negotiations over government funding ahead of an upcoming funding deadline described as occurring on a Tuesday.
- Congress enacted the Pay Our Military Act in 2013 to ensure military pay and allowances continued during a government shutdown.
- Multiple Listing Services (MLSs) allow brokerages to share information on properties they have listed for sale.
📰 Sources (2)
National Flood Insurance Program is set to expire Tuesday, halting new policies and some home loans
New information:
- NFIP currently covers over 4.7 million policies representing about $1.3 trillion in coverage.
- NFIP supports nearly 500,000 home sales annually; approximately 14,800 monthly home‑sale closings in Florida and 3,500 in Texas depend on NFIP flood insurance.
- Program background specifics: created in 1968, about 22,500 participating communities, last long‑term reauthorization in 2012, and 33 short‑term reauthorizations since 2017.
EXCLUSIVE: Democrats risk flood insurance lapse in their shutdown fight, home builders and White House warn
New information:
- Estimated disruption: about 1,300 property sales per day — roughly 40,000 closings in a month — in areas where flood insurance is required to obtain a mortgage
- Policies at risk: more than 400,000 NFIP policies set to expire in October; about 152,000 prepaid, leaving over 250,000 households potentially losing coverage
- FEMA reserves: administration says FEMA currently has $2.6 billion available to pay valid flood claims ($1.5B National Flood Insurance Fund + $1.1B in reserves) but could not borrow additional Treasury funds if a major disaster exceeds those reserves