Government Shutdown, FEMA & The NFIP – Agent FAQs

Don’t stop. Can’t stop. Won’t stop. The federal government may be shut down, but the flood insurance market keeps plugging along. At AFR, we have answers to all your most pressing questions during this time of uncertainty.

What happens to the NFIP during a federal government shutdown?

When NFIP’s authorization lapses (which can coincide with a federal shutdown), FEMA cannot issue new NFIP policies, renewals, or endorsements that increase coverage. However, valid cancellations and endorsements that do not increase coverage (e.g., name corrections) may still be processed; existing policies remain in force, and claims will still be processed and paid for existing in-force policies. 

Can my clients still purchase flood insurance during the shutdown?

Yes. While FEMA cannot issue new NFIP policies or increase coverage limits until Congress reauthorizes funding, borrowers can purchase flood coverage from the private flood insurance market. Private flood insurers are not tied to federal funding and remain fully operational. Agents should emphasize these options to clients needing coverage during a shutdown.

What happens to NFIP renewals during a shutdown?

Renewals may be processed if the renewal offer was issued before the lapse (10/01/2025) and premium is received within NFIP’s allowed timeframe (e.g., the 30-day grace). If the premium arrives outside the allowed grace/extension, the renewal is held in abeyance until authority is restored.

Will FEMA still pay claims during the shutdown?

Yes, until the available funding for paying claims is depleted. Existing NFIP policies remain in force, and FEMA will continue adjusting and paying claims, subject to available funds.

How quickly will NFIP activities resume after reauthorization?

Once Congress restores funding, FEMA and the NFIP will resume issuing policies, processing renewals, and completing pending transactions. If Congress reauthorizes retroactively, carriers can process eligible applications/premiums with effective dates governed by FEMA’s guidance.

How should agents support clients during this time?

• Educate borrowers about the impact of the shutdown on NFIP policies.
• Provide private flood insurance quotes as alternatives.
• Reassure current NFIP policyholders that claims will still be paid.

AFR Support

At AFR, our priority is helping you protect your client and grow your business with:

• Private Flood Market Access - AFR gives you direct access to a wide network of private carriers so you can continue writing policies without interruption.
• Competitive & Flexible Options - Private markets often deliver broader coverage and lower premiums than NFIP policies, giving your clients more choice and protection.
• Dedicated Agent Support - Our team is here to provide quotes, answer questions, and help you keep your clients covered during this period.