HR5484119th CongressWALLET

National Flood Insurance Program Reauthorization and Reform Act of 2025

Sponsored By: Representative Pallone

In Committee

Summary

Makes flood insurance more affordable and modernizes the National Flood Insurance Program. It caps annual premium increases, creates a means-tested discount program, tightens claims and appeals timelines, and funds mapping and mitigation improvements.

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  • Homeowners and renters: Yearly increases in covered costs are capped at 9% for a five-year period and policies can opt into monthly payments with a fee capped at $15.
  • Lower-income households: A graduated discount program targets primary 1–4 family residences for households earning up to 140% of area median income. Congress authorized funding rising from $250 million in FY2024 to $600 million in FY2028 to support the assistance.
  • Communities and local governments: Requires a building-level flood risk database and digital maps, authorizes $500 million per year for mapping through FY2029, and allows up to $1.0 billion per year for a National Flood Mitigation Fund for five years.

*This bill authorizes several billion dollars in new spending for assistance, mapping, and mitigation that would increase federal outlays if funded.*

Bill Overview

Analyzed Economic Effects

21 provisions identified: 12 benefits, 1 costs, 8 mixed.

Up to $120,000 for compliance work

Each NFIP policy would include Increased Cost of Compliance coverage up to $120,000 per property. Eligible uses include approved mitigation, pre‑disaster projects, and certain buyout or relocation costs. Buyout/relocation aid would require the land to stay open space, limited new structures, and insurance and transfer‑notice rules with repayment if the notice is not given.

Flood insurance extended to 2030

This bill would extend the National Flood Insurance Program through September 30, 2030. During a funding lapse, FEMA would be able to use existing Fund money at the last approved operations rate and charge it back later. For five years, Treasury would not charge interest on certain NFIP debts, and an equal amount would go to a mitigation fund. If enacted after September 30, 2025, the extension would be treated as if it began on September 30, 2025.

More money for flood mitigation

If enacted, the bill would put $1 billion each year for five full fiscal years into the National Flood Mitigation Fund for state, local, and property‑level projects. It would also require a yearly set‑aside equal to 10% of the 10‑year average Disaster Relief Fund appropriations to help severe repetitive loss homes and properties with the largest Risk Rating 2.0 increases. The set‑aside would apply to money appropriated after enactment and could not be taken from the flood insurance fund.

25% premium hikes if you refuse help

If you refuse a full mitigation offer that covers 100% of costs and lets you stay in your home, your NFIP risk premium would rise 25% each year. The increase would continue until you accept the offer or your rate reaches an actuarially sound level. This would apply to refusals after enactment.

Faster, fairer NFIP claim decisions

FEMA would create an Independent Office for Policyholder Appeals within 180 days. You could appeal a denial within one year, and the office would decide within 90 days after it has what it needs. For new claims, FEMA or your insurer would decide within 60 days of your proof of loss, with one 30‑day extension, and interest if late. You could get your full claim file within one week, and final engineering reports would be protected and shared. A presumption would favor coverage for foundation damage after a flood unless a qualified engineering report shows direct earth movement; FEMA must set standards in 90 days. FEMA would issue mold‑prevention guidance within one year, and mold exclusions would be narrowed with protections for safety and hardship.

Bigger savings for flood mitigation

If you complete an eligible mitigation action, your NFIP risk premium would be cut by at least 10%. FEMA would publish the credit formulas within 60 days and launch a public premium estimator in 90 days that shows savings from specific actions. FEMA would count major community mitigation projects when setting rates and allow city‑block methods and raising mechanical systems as eligible mitigation. You could also get a one‑time premium credit up to $500 to cover an elevation certificate.

Caps on premium hikes and lapses

For five years, your NFIP charges could not rise by more than 9% in a year, with limited exceptions. If your policy lapses, you would have 90 days to renew at the same renewal rate. FEMA would also have to set up a fair, quick process to appeal property risk inputs used to set your premium.

Levee areas: fair rates, no mandates

In areas protected by an accredited levee, FEMA would not call it a special flood hazard area or require flood insurance. For non‑accredited levees, FEMA would set rules within one year to measure protection and set rates, and create an appeals process for communities. FEMA could not raise rates without enough data until the analysis is done and shared.

More help for lower‑income homeowners

The bill would define covered homes for a new means‑tested assistance program as primary 1–4 family homes and related personal property. Flood Mitigation Assistance grants would prioritize repetitive loss homes, homes with unaffordable premiums, and properties with losses above replacement value. A premium is ‘unaffordable’ if housing costs are more than 30% of a household’s adjusted gross income.

Surcharge relief for small nonprofits

Small businesses and 501(c)(3) nonprofits that own three or more structures on one property could avoid the NFIP surcharge on more than two detached buildings. To qualify, the owner would need to certify the savings will be used for flood mitigation on that property. FEMA would set the certification process within one year of enactment.

State and Tribal mitigation loan funds

FEMA could give grants to States and Tribes to start revolving loan funds for flood mitigation. Funding would be split 50% by share of insured properties and 50% by a premium‑per‑property formula, with a 15% cap per entity. Initial grants must distribute at least 75% within two years; later grants at least 90% within one year. Entities getting under $4,000,000 could give grants with a 25% non‑Federal match. Priority would go to low‑income homeowners and areas, and repayments would recycle for more projects.

Appeal first before suing NFIP

This bill would make you use FEMA’s appeal process before suing over an NFIP claim. You would file an appeal and wait for a final decision or 90 days after FEMA accepts it, then have one year to sue. You could not raise in court an issue you did not raise on appeal. The U.S. Attorney General would handle these cases and could not seek dismissal for good‑faith proof‑of‑loss mistakes. The appeal rule would start 180 days after enactment.

Higher coverage limits tied to mortgages

Fixed NFIP coverage caps would be replaced with a baseline tied to the largest mortgage Fannie Mae can buy. FEMA could raise the baseline only once every five years and could not lower it. FEMA could also sell policies meeting the new limits without some older regulations.

Stronger flood risk data and disclosures

After September 30, 2024, new NFIP coverage would generally require local laws that make sellers and landlords disclose flood history and risk before a buyer or renter signs. FEMA would build a property‑level risk database within five years; owners and leaseholders could access their entry. NFIP communities could be required to send elevation data for new permits, and FEMA would issue mapping guidance and appeals rules in 180 days. FEMA would also post yearly premium stats by state, county, and ZIP code.

Caps on insurer pay, agent minimums

NFIP insurers would be limited to at most 22.46% of their total NFIP premiums as reimbursement for selling and servicing policies. Insurers would have to pay agents at least 15% of the premiums the agent sells as commission. These limits would take effect upon enactment.

Tighter rules for private NFIP partners

Audits would treat underpayments and overpayments the same for penalties, with a safe harbor for non‑bad‑faith overpayments up to 4% of the policy limit. FEMA would post all reimbursements to private partners and only repay actual vendor costs, under a rule due in 90 days. FEMA could end certain vendor contracts for misconduct with at least 14 days’ notice and an appeal process, without early termination payouts. The bill would define the Write Your Own program and companies, and create an Agent Advisory Council to improve agent training, claims handling, and customer experience.

Stronger NFIP pricing and reporting rules

FEMA would have to compute the average historical loss year using generally accepted actuarial methods. The agency would also need to report how many affordability exceptions exist and list the county and state for each policy using an exception as of the report date. These changes could affect how rates are set and improve transparency.

More options for co‑ops and condos

Co‑op owners would be able to buy NFIP coverage on the same terms as condo owners. FEMA would also offer an optional rider to cover basements used as separate homes in certain older (pre‑FIRM) condo buildings. FEMA would update related rules within 180 days.

Help small towns cut premiums

FEMA would appoint a regional coordinator in every region to help small communities join and benefit from the Community Rating System. The bill would allow spending the sums needed, which would remain available until spent.

Monthly premium payments, $15 fee

You could choose to pay your NFIP premium monthly. If you opt in, FEMA could charge up to $15 per year for this option. FEMA could start a pilot or interim policy before issuing final rules.

New training rules for agents, adjusters

Insurance agents who sell NFIP policies would need a three‑hour course every two years approved by their home‑state insurance commissioner. Agents who do not finish could not sell flood insurance until they complete it. FEMA regional offices would train local floodplain managers, agents, and adjusters on damage rules and may give refreshers after major disasters. Agents licensed in multiple states would need to show proof to each state.

Sponsors & CoSponsors

Sponsor

Pallone

NJ • D

Cosponsors

  • Higgins (LA)

    LA • R

    Sponsored 9/18/2025

  • Watson Coleman

    NJ • D

    Sponsored 2/24/2026

Roll Call Votes

No roll call votes available for this bill.

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