Flood Insurance Costs Could Soar 64% Without Government-Backed NFIP

For more than a month, a lapse in funding froze Americans’ largest provider of flood insurance. The National Flood Insurance Program, which accounts for 90% of all U.S. flood policies, often couldn’t sell or renew coverage during the 44-day government shutdown.^[1] The budget bill that ended the shutdown also reauthorized the NFIP through Jan. 30, 2026.^[2] The incident highlighted how flood insurance costs could spike for many policyholders if the program ended.

The federal government heavily subsidizes the NFIP, which generally keeps average rates below those of private flood insurance offerings. More than 4.6 million Americans, including a nation-leading 1.8 million in Florida, depend on the NFIP for flood insurance.

The NFIP, part of the Federal Emergency Management Agency (FEMA), is often the only coverage option for homes with unusually high risk that private insurers refuse to cover.

Project 2025, the presidential transition plan by the Heritage Foundation, calls for eliminating the NFIP due in part to its cost to taxpayers. Republican and Democratic lawmakers, however, have stressed the NFIP’s importance.^[3] The average NFIP policy costs $934 annually. If the program ended, the average cost of coverage could rise by $600 to $1,534 annually, according to an Insurify analysis of FEMA and NFIP data.

Phasing out the NFIP could also jeopardize thousands of residential real estate transactions. Mortgage lenders typically require flood insurance before finalizing loans in flood-prone areas, and the NFIP supplies the necessary policies in most cases. The National Association of Realtors estimates the recent shutdown affected 1,400 transactions each day.^[4]

Insurify data scientists estimated how much average insurance rates could rise, both nationally and in each state, if private insurers fully replaced the NFIP. The analysis revealed that many of the most flood-prone states could see sharp increases in average annual costs, with seven states seeing premiums more than double.

Key findings:

• Insurify projects that homeowners with NFIP flood insurance could pay 64% more, an additional $600 per year on average, if they were insured privately. Homeowners pay an average of $934 annually for flood insurance through the NFIP and could pay as much as $1,534 if the NFIP were to end.

• Without the NFIP, Hawaii could see its average annual flood insurance costs triple (218% increase), while costs could more than double in West Virginia (176%), New Hampshire (131%), Connecticut (114%), Alabama (106%), New Jersey (104%), and Mississippi (102%).

• Five states account for two-thirds of all flood insurance policies: Florida, Texas, Louisiana, New Jersey, and California. On average, flood insurance costs in those states could increase by 74% — $719 per year — without the NFIP.

• The NFIP provides 97% of flood policies in Louisiana, which has a high flood risk, and only 66% of policies in Wyoming, which has a low flood risk.

Without the NFIP, Americans could pay $600 more each year for flood insurance on average

The average cost of an NFIP policy ranges from $429 to $1,678 per year, depending on the state. Nationally, this amounts to an average annual cost of $934. 

If Congress eliminates the NFIP, Insurify’s analysis suggests that the average could rise 64% to $1,534 per year. In other words, the typical policyholder could go from paying $78 per month to paying an estimated $128 per month.

That increase would result from the loss of federal subsidies, leaving insurers to use more actuarially sound “full-risk” pricing.^[5] One Congressional report stated that private insurers may still view those policies as underpriced, even after risk-adjusted premium increases.^[6]

If the NFIP ended, people in Gulf Coast states, which have high flood risk from hurricanes, could see rates rise faster than most. That would put additional financial stress on homeowners in states like Florida and Louisiana, who already pay the highest home insurance rates nationwide. But other states that experience torrential rain and river flooding, like New Hampshire and California, could also see their costs jump.

Recent NFIP hikes have already priced out some high-risk homeowners

FEMA, which manages the NFIP, began rolling out a new pricing system named Risk Rating 2.0 in late 2021. The system aims to bring “outdated” rates more in line with a property’s risk.^[7] The agency said it’ll lead to higher flood insurance costs on average.

As the new pricing has gone into effect, thousands of Americans have dropped their flood insurance coverage due to rapidly rising premiums, particularly in flood-threatened states.^[8] In the past year, more than 45,000 Texas policyholders and 21,000 Louisiana policyholders have dropped their NFIP coverage.^[9]

High premiums are one critique of the NFIP. Additionally, opponents of the NFIP say the program encourages development in flood-prone areas by shifting risk from homeowner to taxpayer. The Cato Institute, a Libertarian think tank, has advocated for privatization with some more targeted subsidies for vulnerable communities.^[10]

Although NFIP costs are rising quickly in many communities, those rates generally remain cheaper than rates available from the private market.^[11] With Risk Rating 2.0, homeowners facing significant increases would see those hikes staggered over time, as its increases are capped at 18% annually for primary homes.

If the NFIP ended, however, those hikes may not be capped. Without the staggered rollout, immediate and substantial insurance hikes could accelerate the trend of Americans in flood-prone areas forgoing coverage.

Flood-critical states could pay 74% more annually without the NFIP

Without the NFIP, the five states with the highest number of flood insurance policies could see especially high cost increases. About 38% of all U.S. flood policies are based in Florida, with another 13% in Texas. From 2020 to 2024, the NFIP paid out $17.6 billion in claims, with Florida alone receiving $13.5 billion (77%).

Five states — Florida, Texas, Louisiana, New Jersey, and California — make up two-thirds of the nation’s flood policies. Those states could see steeper price increases than others if the NFIP were to cease providing coverage. Insurify projects costs could rise by 74%, or $719 annually, based on market rate projections.

1. Florida

• Total flood insurance policies: 1,939,304

• NFIP average annual cost: $902

• Projected average without NFIP: $1,584 (76% more expensive)

Florida alone makes up more than a third of the nation’s flood insurance policies, and the vast majority of the state’s policies — 1.8 million — are provided through the NFIP (93%). Hurricane risk makes the state more dependent on federal assistance than most. For example, major storms contributed to the NFIP paying out more than $7.5 billion in claims to Floridians in 2024, while just $1 billion went to all other states combined. The increasing cost of severe weather is one reason Florida is the least affordable state for homeowners.

2. Texas

• Total flood insurance policies: 666,629

• NFIP average annual cost: $923

• Projected average without NFIP: $1,408 (53% more expensive)

Texas’ flood risk came into sharp focus in 2025 when flash flooding struck Central Texas early July 4, leading to at least 135 deaths.^[12] Of all states, FEMA reports that Texas has the highest expected financial losses from river flooding and the second-highest from hurricanes.^[13] In 2017, Hurricane Harvey led to extreme rainfall and flooding that damaged or destroyed more than 200,000 homes and businesses.

3. Louisiana

• Total flood insurance policies: 430,104

• NFIP average annual cost: $965

• Projected average without NFIP: $1,805 (87% more expensive)

Louisiana has the third-highest number of flood insurance policies of any state. The NFIP provides 97% of those policies. Average flood insurance costs in the state could nearly double if the NFIP ceased, leaving residents with unsubsidized rates, according to Insurify’s analysis of FEMA data. Louisiana also already relies on federal disaster assistance more than other states. From 2020 to 2024, Louisiana received a quarter of all FEMA disaster relief funding ($8 billion of $33 billion).

Flood insurance costs in the state had already been rising rapidly as part of the NFIP’s new risk rating system.^[14] Adding to the financial pressure, Louisianans pay the second-highest average home insurance rate of any state, at $5,132 per year.

4. New Jersey

• Total flood insurance policies: 228,208

• NFIP average annual cost: $1,045

• Projected average without NFIP: $2,130 (104% more expensive)

New Jersey policyholders could see their flood insurance costs more than double without the NFIP’s subsidized rates. Most of the state’s population (53%) lives in a coastal zone along the shore and rivers.^[15] That explains why New Jersey has the highest expected financial losses from coastal flooding of any state.^[13]

Flooding from Hurricane Sandy in 2012 destroyed or damaged an estimated 346,000 homes in the state, and the storm remains one of the most expensive disasters in U.S. history.^[16] Homeowners have to choose between absorbing that risk on their own or paying above-average flood insurance premiums. Those same homeowners already pay the highest average property taxes of any state.

5. California

• Total flood insurance policies: 220,075

• NFIP average annual cost: $961

• Projected average without NFIP: $1,462 (52% more expensive)

Wildfires are far from the only climate threat Californians have to cope with. At the end of 2022, relentless rain resulted in more than 700 landslides, 1,400 rescues, and 21 deaths. From 2020 to 2024, the NFIP paid out more than $124 million in flood claims to California businesses and homeowners.

The state expects flood risk to increase due to more storms that hold more moisture, resulting in larger flood flows on major rivers.^[17] By 2050, a Cotality analysis estimates, the state’s flood risk will surpass its wildfire risk.^[18]

States with the highest potential increases: Hawaii, West Virginia, New Hampshire

Flood insurance prices under the NFIP are already rising quickly in many communities but often remain well below rates that more closely reflect actuarial risk.^[5] The NFIP’s new risk rating system caps premium increases at 18% per year for primary residences. But, without the NFIP, those costs could accelerate faster in the private market to more closely match the level of risk that the market assesses.

Seven states could see their average flood insurance costs double if left with no other choice but the private market. Ten states could see average prices rise over $1,000 per year, and 45 states could see average prices rise over $100 per year.

1. Hawaii

• Total flood insurance policies: 64,151

• NFIP average annual cost: $787

• Projected average without NFIP: $2,507 (218% more expensive)

Hawaii faces the highest potential increase in flood insurance premiums without the NFIP. Insurify’s analysis indicates costs could rise by $1,720 for the average policyholder. More than 30% of properties in the state are at risk of flooding, according to First Street.^[19] That comes out to more than 120,000 at-risk properties. By 2100, one projection shows that sea levels off Honolulu could rise as much as 8 feet compared to their levels in 2000, increasing the threat of coastal flooding.^[20]

2. West Virginia

• Total flood insurance policies: 13,668

• NFIP average annual cost: $1,678

• Projected average without NFIP: $4,633 (176% more expensive)

West Virginia already pays the highest flood insurance premiums of any state. The state’s geography, with steep inclines and narrow valleys, makes it susceptible to flash flooding. A First Street analysis estimates that 331,500 properties in the state face “substantial risk” of flooding.^[21] In 2016, once-in-a-thousand-year rains caused flash flooding that led to at least 23 deaths.^[22] The NFIP went on to pay more than $48 million in claims to West Virginians that year.

3. New Hampshire

• Total flood insurance policies: 9,106

• NFIP average annual cost: $1,140

• Projected average without NFIP: $2,637 (131% more expensive)

Although New Hampshire residents pay some of the lowest average home insurance prices in the country, flood insurance is a different story. Snow accumulation and heavy rains often increase the risk of flash floods. Across commercial and residential properties, policyholders pay an average of $1,140 annually for flood coverage through the NFIP, about $200 above the national average. In 2023, flooding events affecting New Hampshire and other states racked up about $3.5 billion in estimated damages.

Tips: How homeowners can save on flood insurance

Flood insurance may seem expensive, but it could rescue homeowners from extreme financial peril in the event of a disaster. Just 1 inch of flood water can cause up to $25,000 in property damage, according to the NFIP.^[23]

Flood insurance rates vary significantly by location, so homeowners should make sure to shop for quotes from the NFIP and private insurers. Additionally, the NFIP provides a list of measures that could lower flood insurance prices on a property-by-property basis.

• Elevate the home. Raising a structure 1 foot above a community’s base flood elevation can lead to a 30% cost reduction.

• Elevate utilities, such as heating and cooling systems, water heaters, and electrical panels.

• Install at least two flood openings that meet NFIP criteria.^[24]

• Consider filling in crawl spaces or basements. The NFIP reports that homes with basements in high-risk areas face 15% to 20% higher flood insurance premiums.

If homeowners are still looking for lower premiums, they can consider increasing their deductible, although they’d have to cover more of the up-front cost if a covered event occurs.

Methodology

Insurify data scientists estimated the potential cost increase for flood insurance in the absence of the NFIP using NFIP and FEMA data. Insurify analyzed the expected increase in insurance costs under risk-based rates on a state-by-state basis using FEMA’s median single-family home pricing data.^[5] Those increases were applied to the most recent available price averages for NFIP policies nationally and in each state.^[9]

Projected cost figures are estimates. Actual premiums may vary by property, insurer, and other factors.

Figures on the total number of flood insurance policies nationally and by state include NFIP policies and private policy data from the National Association of Insurance Commissioners’ Private Flood Insurance Data Call.^[11]