Here's something that might surprise you: your home is 27 times more likely to flood than catch fire during a 30-year mortgage. Yet while nearly every homeowner has fire coverage as part of their standard policy, only 4% have flood insurance. That gap between risk and protection has never been more concerning than it is heading into 2026.
The National Flood Insurance Program—the federal program that's been the primary source of flood coverage since 1968—is showing serious cracks. It's carrying $22.5 billion in debt, has been kept alive through 33 short-term extensions since 2017, and its coverage limits haven't kept pace with modern property values. Meanwhile, private flood insurance companies are stepping up with better options, and they're growing at 20% annually. If you've been putting off thinking about flood insurance, now's the time to pay attention.
Why the National Flood Insurance Program Is Struggling
The NFIP was created nearly 60 years ago when private insurers walked away from flood coverage because it was too risky. The federal government stepped in to fill the gap, and for decades it worked reasonably well. But climate change, outdated flood maps, and a series of catastrophic hurricane seasons have pushed the program to its breaking point.
In 2024 alone, Hurricanes Helene and Milton generated over $10 billion in flood claims. To cover these losses, FEMA had to borrow $2 billion from the U.S. Treasury in February 2025—the first time the program needed to tap into borrowing authority since 2017. The NFIP now owes $22.5 billion to the Treasury and pays about $619 million in interest annually. That's $1.7 million in interest every single day.
Congress hasn't been able to agree on long-term reforms, so instead they've been kicking the can down the road with short-term extensions—33 of them since September 2017. Each time the program's authorization is about to expire, Congress passes another temporary fix. This creates uncertainty for homeowners, lenders, and real estate markets. If the program were to lapse even temporarily, new policies couldn't be issued and existing policies couldn't be renewed.
The Coverage Gap Problem
Even if you have NFIP coverage, there's a good chance it won't be enough. The program caps building coverage at $250,000 for residential properties and contents coverage at $100,000. Those limits haven't changed in years, but home prices certainly have. If you live in a coastal area or major city where a modest home costs $400,000 or more, you'd be significantly underinsured in a total loss scenario.
Here's another problem: many homeowners don't realize they need flood insurance at all. Standard homeowners policies don't cover flood damage—not a drop. Yet 53% of homeowners don't know this. They assume their regular home insurance will kick in if their basement floods or a river overflows. It won't. And by the time they find out, it's too late.
The risk is broader than most people think. Nearly one-third of NFIP claims between 2013 and 2023 came from properties outside FEMA's high-risk flood zones. These are homes in areas designated as low or moderate risk—places where flood insurance isn't required by mortgage lenders. But floods don't respect map boundaries. Heavy rain, clogged storm drains, or a failing retention pond can flood any neighborhood.
How Private Flood Insurance Is Changing the Game
While the NFIP struggles, private insurers are building a robust alternative. Private residential flood policies grew at a 20% compound annual growth rate between 2020 and 2024, reaching approximately 569,000 policies by 2024. That's still small compared to the NFIP's 4.7 million policies, but the trend is clear: private flood insurance is becoming a real option.
Private insurers can offer higher coverage limits—often up to $500,000 or more for building coverage—which makes them a better fit for homes that exceed NFIP's caps. They also tend to use more sophisticated risk modeling and pricing, which means if your home is in a lower-risk area, you might pay less with a private insurer. Industry estimates suggest about 60% of homeowners could save money by switching to private coverage.
Private policies also come with perks that NFIP doesn't offer. Many include coverage for additional living expenses if you need to stay in a hotel while your home is being repaired. Some offer replacement cost coverage instead of actual cash value, meaning you get enough to rebuild without a depreciation deduction. And private policies typically take effect in as little as two weeks, compared to NFIP's mandatory 30-day waiting period.
Of course, private insurance isn't perfect. If you're in a high-risk flood zone with a history of claims, private coverage might be more expensive than NFIP—or insurers might not want to cover you at all. The NFIP, for all its problems, has to accept you regardless of your flood risk. That's an important safety net for homeowners in the most vulnerable areas.
What You Should Do Right Now
First, find out if you're at risk. FEMA's Flood Map Service Center lets you look up your property and see its flood zone designation. But don't stop there—nearly half of homeowners have never used this tool, and FEMA's maps are often outdated. Consider your property's elevation, proximity to water, and local drainage. If you have a basement or live near a creek, you have flood risk worth insuring against.
Second, get quotes from both NFIP and private insurers. Don't assume one will be cheaper—pricing varies wildly based on your specific situation. An independent insurance agent can help you compare options and coverage levels. Make sure you're looking at similar coverage amounts and deductibles when comparing quotes.
Third, don't wait for a flood warning to buy coverage. Both NFIP and private policies typically have waiting periods before they take effect. If a hurricane is heading your way and you don't have coverage yet, you're out of luck. Buy flood insurance during the calm times, not when disaster is imminent.
Finally, if you already have NFIP coverage, review it annually. Check whether your coverage limits still match your home's value and your belongings. And every few years, get a quote from private insurers to see if you could get better coverage or a better rate. The flood insurance market is changing rapidly, and you don't want to leave money—or protection—on the table.
Flood insurance isn't the most exciting topic, but in 2026 it's one of the most important conversations you can have about protecting your home. With the NFIP's uncertain future and private options expanding, this is the year to make sure you have the right coverage at the right price. Your home is probably your biggest investment. Make sure it's protected against the disaster that's 27 times more likely than fire.
