The Impact of a Government Shutdown on the National Flood Insurance Program (NFIP)

With another Government shutdown averted with a short-term funding fix, the new date of peril has shifted to November 17th. Insurance Agents, Realtors and much of the business community are feeling relieved while bracing for the looming potential of a shutdown. This leads us to a question that is often asked in our industry, what happens when the government is “shutdown” and how will it affect the National Flood Insurance Program (NFIP)?  

When Congress fails to enact the twelve annual appropriation bills, federal agencies must cease all non-essential functions until Congress acts. This is known as a government shutdown. If Congress enacts some but not all of the twelve appropriations bills, only agencies without appropriations must shut down; this is known as a partial shutdown.  

During shutdowns, many federal employees are told not to report for work. Government employees who provide what are deemed essential services, continue to work, but don’t get paid until Congress takes action to end the shutdown. Shutdowns can be disruptive, leading to delays in processing applications for passports, small business loans, or government benefits, and a lapse in the National Flood Insurance Program. 

When the NFIP is shut down, they cannot issue new policies or renew policies. In flood prone areas this could lead to lapses of coverage and delaying of property closings. The National Association of Home Builders estimates about 1,300 property closings each day could be delayed. This would come at a time when we have seen more frequent severe weather which consequently makes severe flooding more likely.  

Furthermore, about 4.7 million flood insurance policies in the United States are from the NFIP, which accounts for almost 70% of all flood insurance policies. To say this would have major economic repercussions would be an understatement.   

Before a shutdown, advising clients to have a backup plan to avoid a lapse of coverage. There are private flood insurance options that can be utilized in the event of a shutdown to avoid a lapse of coverage.  

This is why we at OIA and our partners at the Big I have continually advocated for a long-term reauthorization of a modernized NFIP. A program that would increase take-up rates, both in the NFIP and the private market. Specifically, legislation which would allow for private flood insurance to satisfy continuous coverage requirements and ensures that if consumers leave the NFIP for the private market and later must return, they can do so without penalty. 

We hope to see a long-term solution passed in the coming weeks, but in the event of a government shutdown we encourage you and your clients to be prepared to avoid lapses of coverage.  

Interested in joining our advocacy efforts? Questions on the NFIP or our Advocacy? Please reach out to John Wells at

Success Starts Here

Sign up for our newsletter today!
  • This field is for validation purposes and should be left unchanged.