Flood insurance through NFIP now offers monthly payment options

Property owners purchasing flood insurance through the National Flood Insurance Program (NFIP) will soon have a new payment option. Starting December 31, the Federal Emergency Management Agency (FEMA), which oversees the NFIP, will allow monthly installment payments for flood coverage instead of requiring annual up-front payments. This change aims to "expand access" and "reduce barriers to purchasing flood insurance," according to FEMA.

“Some consumers may lack the financial ability to pay the entire premium at one time,” FEMA stated in the Federal Register. “The installment plan relieves the immediate financial pressure on policyholders from paying the entire premium amount at one time.”

This new option is available for property owners renewing their NFIP policies or buying coverage for the first time as of December 31. However, those whose lenders require them to escrow their NFIP premiums must still pay annually upfront.

As reported by FEMA data, there were 4.7 million NFIP policies in force as of April 30. The monthly payment option applies to dwelling, commercial, and condo policyholders but excludes group flood insurance policies provided after presidentially declared major disasters.

Florida holds more than 894,000 single-family home NFIP policies—the highest number among states—followed by Texas with over 586,000 and Louisiana with more than 397,000.

In a Bank of America Institute survey conducted in 2024, over half of respondents described themselves as living paycheck to paycheck. A quarter of households reportedly spend nearly all their income on necessary expenses.

FEMA noted that monthly payments could make it easier for people who cannot afford full premiums upfront. In Hawaii, for example, homeowners previously paid an average risk-based NFIP premium of $3,258 per year all at once.

“Providing an option for monthly installments will expand access to flood insurance to meet the evolving needs of the nation,” wrote FEMA. “The option to pay in installments may also increase policyholders’ budgetary flexibility by alleviating cash flow pressure.”

Regular payments might also keep homeowners aware of their flood risk and encourage continued coverage. “Facing a one-time annual payment...a policyholder may rationalize a decision to opt out...In contrast...policyholders who make more frequent flood insurance payments will have an ongoing reminder that they are protected against flood,” stated FEMA.

Changing weather patterns are increasing Americans' exposure to flooding risks. For instance, Hurricane Helene caused severe flooding in Mills River—a North Carolina community not participating in the NFIP.

States with most NFIP policies like Florida, Texas, and Louisiana are also among those with high home insurance costs according to Insurify's report. In Florida alone, average annual home insurance costs $11,759 while standard policies do not cover floods; separate protection via either NFIP or private insurers is required.