New Flood Insurance Bill Mandates 120-Day Claim Decisions and Surcharges for Pre-Existing Condition Checks

The National Flood Insurance Program Administrative Reform Act of 2025 is trying to fix the disaster that is the National Flood Insurance Program (NFIP) claims process. It aims to speed things up, crack down on fraud, and give policyholders more power, but it also introduces new costs and hurdles.

Finally, A Deadline: 120 Days to Pay Up or Deny

If you’ve ever filed a flood claim, you know the wait can be brutal. This bill (Sec. 5) sets a hard deadline: the NFIP Administrator must now approve or deny a claim within 120 days of receiving a signed proof of loss form. If they approve it, they have to pay “as quickly as possible.” This applies to all claims currently pending and all future claims. This is a massive win for policyholders who need cash quickly to rebuild their homes and lives.

However, there’s a catch. The Administrator can extend that 120-day deadline under “extraordinary circumstances,” which they get to define later in new regulations. If those definitions are too broad, that hard deadline could become a lot softer, leaving policyholders back where they started: waiting.

The New Mandatory Appeals Process (and Why It Matters)

Under Section 4, if the NFIP denies your claim, either fully or partially, you must now go through a new, formal administrative appeals process before you can sue. This process is mandatory—you have to exhaust this remedy before heading to court. The Administrator has 120 days to issue a final decision on your appeal.

This might sound like more red tape, but it has a crucial upside: the clock for the one-year statute of limitations (the deadline to file a lawsuit) is paused while your appeal is being reviewed. For policyholders, this means you can try to resolve the claim internally without panicking about missing your window to sue. It gives you a real shot at getting a fair internal review before you have to hire a lawyer.

Checking the Fine Print: The Pre-Existing Condition Pilot Program

Section 2 establishes a new, voluntary pilot program for the private insurers that handle NFIP policies (called “Write Your Own” companies). If a company opts in, they can investigate properties for pre-existing structural issues—the kind of problems that could lead to a claim being denied later. The goal is to catch these issues early.

But here’s the kicker: this program is funded by a surcharge added to every policy participating in the pilot. If you live in an area covered by this pilot program, you’ll be paying extra to cover the insurance company’s cost of investigating potential issues. While identifying problems early could prevent a denied claim down the road, the cost burden falls directly on the policyholder, regardless of whether their home is found to have an issue or not.

Transparency and Fraud: Getting the Reports and Cracking Down

Two other changes aim to level the playing field. First, Section 8 mandates that the NFIP must give policyholders a full, unedited copy of any “technical assistance report” (like engineering or accounting reports) used to adjust their claim. No more fighting for the data used to deny you. Second, Section 3 creates explicit, serious penalties for knowingly submitting false or fraudulent reports or claims. If you fake an engineering report to get an improper payment, the government can now pursue you, and the Attorney General must refer you to your state licensing board if you’re a professional.

Finally, to help policyholders understand what they’re buying, Section 9 requires a new, plain-language disclosure sheet that clearly explains what a “flood” is, what is not covered in your basement (spoiler: finished walls and floors usually aren't), and how to buy optional personal property coverage. You must sign an acknowledgment form confirming you received and understand these details, which should cut down on the shock when a claim is denied because of policy exclusions.