Will a Government Shutdown Raise Flood Insurance Costs?

Short Answer: No, a government shutdown won’t raise your flood insurance premiums. But it can delay your ability to get or renew coverage—especially through the National Flood Insurance Program (NFIP)—and that could derail a home purchase or leave you vulnerable during storm season.

Why Flood Insurance Buyers Are Concerned in 2025

Are flood insurance prices going up because of the government shutdown? Will I still be able to close on my house?

At The Flood Insurance Guru, these are the exact questions we’re hearing from homeowners and real estate agents right now. With over 4.7 million policyholders relying on NFIP coverage, it’s crucial to understand how a government shutdown changes the rules—and what really causes rates to increase.

In this article, you’ll learn:

• How the October 2025 shutdown impacts flood insurance policies
• Why Risk Rating 2.0 is the real reason prices are changing
• What your options are during a shutdown—including private flood insurance

How the October 2025 Government Shutdown Impacts Flood Insurance

When the federal government shuts down, NFIP loses its ability to issue new policies or process renewals. This happened on October 1, 2025, and the ripple effects are massive.

Is My Existing NFIP Policy Still Valid? Waterproof email

• ✅ Yes. If you already have an active NFIP policy, it remains valid through its expiration date.
• ✅ FEMA can still pay claims—as long as they have the funds available.

FEMA’s borrowing authority drops from $30.4 billion to just $1 billion during a shutdown.

Why this matters: If a major flood event occurs, FEMA may not have enough funds to pay out claims promptly.

Can I Get New Flood Insurance Right Now?

❌ Not through NFIP. During a shutdown:

• No new NFIP policies can be issued
• No policy renewals can be processed

This affects thousands of real estate transactions:

• Nationwide: ~1,300 closings per day require flood insurance
• Florida: ~14,800 closings/month affected
• Texas: ~3,500 closings/month delayed

If your home is in a flood zone, your closing could be stalled indefinitely.

Will Flood Insurance Premiums Go Up During the Shutdown?

No, the shutdown doesn’t directly increase NFIP premiums.

But many homeowners are still seeing rate hikes, camera they said that know who the owner ownerand here’s why.

Risk Rating 2.0: The Real Reason Flood Insurance Costs Are Increasing

In 2023, FEMA completed the rollout of Risk Rating 2.0, which replaced the old flood zone-based pricing system with a more personalized risk model.

What Changed?

• Distance from water
• Flood type (e.g., coastal, riverine, pluvial)
• Flood frequency
• Foundation type
• First floor elevation
• Replacement cost value
• Claims history

This means two houses on the same street may have totally different premiums—based on individual risk.

How Much Can My Rate Go Up?

• Primary residences: Max 18% increase/year
• Secondary/investment homes: Max 25% increase/year

These caps still apply during a government shutdown.

If your policy lapses, you may be re-rated under Risk Rating 2.0 and lose any grandfathered rate.

What Are My Flood Insurance Options During a Government Shutdown?

If you can’t access NFIP, you still have other options—and in some cases, they might be better.

✅ Option: Private Flood Insurance

• Coverage up to $7 million
• Fast turnarounds (24–48 hours)
• Uses real-time risk modeling for pricing
• Available in many high-risk zones

Bonus: Some private insurers cover additional structures, contents, and loss of use.

Final Takeaway: Be Proactive, Not Panicked

A government shutdown won’t raise your premiums—but it might stall your plans.

At The Flood Insurance Guru, we help homeowners:

• Understand Risk Rating 2.0
• Compare NFIP vs. private flood insurance
• Make smart decisions—even in uncertain times

What to Do Next

👉 Private vs. NFIP Flood Insurance: Which is Right For You?

Ready to Talk to a Flood Insurance Expert?

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Frequently Asked Questions

Does a government shutdown affect flood insurance claims?

No. Existing NFIP policies remain in effect, and claims will be paid—unless FEMA runs out of available funds.

Can I buy new flood insurance during a shutdown?

Not through NFIP. However, private flood insurance is still available from many providers.

Will my premiums go up because of the shutdown?

No. Premium changes are due to Risk Rating 2.0, not government shutdowns.