I recently wrote about the short-term extension that halted the potential expiration of the National Flood Insurance Program (NFIP) set for November 30, 2018. Following that post, the NFIP was extended by Congress until December 21, 2018, and a lapse was averted.

On December 21, the President signed legislation passed by Congress extending the NFIP’s authorization to May 31, 2019. However, much of the federal government shut down on December 22, 2018, and the shutdown could affect the NFIP’s operations until the full government reopens.

It is unclear how long the partial shutdown will last but appears it will extend into the New Year.

Based on previous shutdowns, payment of current claims by the NFIP will continue. During past shutdowns the NFIP stopped issuing new flood insurance contracts or renewing existing policies, which could affect home sales and closings. The NFIP will continue to pay out valid claims until it runs out of money. It cannot pay additional claims until it collects enough in incoming premiums or is allocated more money by Congress.

It is also expected, based on past shutdowns, that FEMA will continue any ongoing disaster efforts. If there is a major disaster where states need assistance during the current shutdown, FEMA could be called on for help.

Long term approval of the NFIP expired in September 2017 and the program has operated under a series of short-term extensions ever since. Despite criticism of the program, which has fallen into billions of dollars of debt, Congress has not yet overhauled the program.