National Flood Insurance Program NFIP

Private insurers largely stopped covering floods after the Mississippi River floods of 1927, and repeated federal disaster spending led Congress to create the National Flood Insurance Program in 1968. Communities that adopt floodplain management rules can join, and their residents can buy federal flood coverage, mostly sold through private insurance companies that service the policies for FEMA. Since 1973, homeowners in high-risk flood zones with mortgages from federally regulated or insured lenders must carry flood insurance. Standard homeowners policies do not cover floods.

The program covers about 4.7 million policies in more than 22,000 communities, far fewer than the homes at risk. It was designed to charge many older properties less than their full risk, and after hurricanes Katrina in 2005 and Sandy in 2012 it borrowed heavily from the Treasury. Congress canceled 16 billion dollars of the debt in 2017, but the program still owes more than 20 billion dollars. A new pricing system called Risk Rating 2.0, phased in from 2021, ties premiums to each property's risk, raising rates sharply for many owners while lowering them for others.

The program's authority must be renewed by Congress and has been extended dozens of times, usually in short stretches attached to spending bills, and it lapsed during the 2025 government shutdown, halting new policies until funding resumed. It is currently authorized through December 11, 2026. A council convened by the President recommended in May 2026 shifting flood insurance gradually toward the private market. Supporters of reform say subsidized rates encourage building in harm's way, while others warn that higher premiums could drive families out of coastal and river communities or leave them uninsured.