7 States Have Their Flood Insurance Heavily Subsidized by the US Taxpayer

But not all states are subsidized equally: there are seven states in which more than 50% of flood insurance holders are subsidized by the NFIP, led by West Virginia (73% of policies subsidized), Hawaii (64%) and Mississippi (61%). This trend is not uniform across all states: places like Maryland (12%), Utah (14%) and Michigan (21%) have comparatively fewer policies being subsidized by taxpayer money.

The 10 states with the highest share of subsidized flood insurance policies are a mixture of inland states and coastal states, with coastal states being defined as those touching an ocean. In fact, an inland state (West Virginia) ranks first: 73.1% of its policies pay less than the full-risk price. Two other inland states (Kentucky and Pennsylvania, ranking 7th and 10th respectively) also make the top 10.

The other seven states are coastal states, led by Hawaii and Mississippi with over 60% of their policies subsidized to some extent. Subsidized policies will generally see an expected bill increase of around 17%, but unsubsidized homes are assumed to have no bill increase, so the average bill for these states as a whole is expected to rise anywhere from 7.1% to 11.5% over the next year.

*The average bill increase is the total dollar of expected increases in the next year divided by total bills, so it is a dollar-weighted average increase that differs from a simple calculation of share of subsidized policies multiplied by the 17% premium increase.

Why are states subsidized? In October 2021 the NFIP changed its pricing system to a new one called Risk Rating 2.0. This replaced the old flood-zone based pricing with one based on more specific factors like distance to a water source, the nature and frequency of floods and building characteristics. Policies whose new price was lower dropped to it right away. Those whose new price was higher have been climbing toward it by up to 18% a year, and the ones still short of it are the subsidized policies.

States like West Virginia or Hawaii, that have a large share of policies subsidized, are those in which the new rating methodology priced the most homes above their old rates. Our data shows the states in which this legacy pricing is more prominent.

On the other end of the rankings, Maryland, Utah and Michigan have the lowest shares of subsidized policies, not counting Alaska and D.C. (see note under the table). Two of the six lowest states are coastal (Maryland and Virginia) and four are not (Utah, Michigan, Colorado, and Nevada). Alaska, the state with the lowest share of any state, has an ocean coast. A coastline or lack of a coastline alone doesn't explain why shares of subsidized policies are low.

*Alaska (4.2%, 50th) and D.C. (2.2%, 51st) were excluded from the table given the low sample of policies subsidized.

Only partly. The median coastal state has 40.9% of its policies subsidized, versus 37.3% for the median state without an ocean or Gulf coast. Weighted by the number of policies, the gap is wider: 43% for coastal versus 36.3% for inland. So coastal states are somewhat more likely to be subsidized, but some of the most subsidized states are landlocked, and this may reflect higher modeled prices for homes in areas at risk of non-coastal flooding, such as in river valleys.

In dollars, the picture shifts from the small states with high shares to the big flood-insurance states. The 968,811 subsidized policies would together pay about $1.42 billion more per year at full price (all-in, with fees; $1.20 billion before fees). Florida accounts for $639 million of that (45%), Louisiana $206 million (15%) and Texas $134 million (9.5%). Three states hold 69% of the total, and the top 10 hold 87%. Louisiana ranks second in dollars even though it is fifth by share, because it has 285,000 policies.

West Virginia, first by share, ranks 19th in dollars (about $9 million) because it has only 5,106 policies, but its average subsidy, counting every policy in every state, is the largest in the country at $1,755 per policy. At the other end, D.C. ($1,424), Alaska ($103,000), Utah ($377,000), Wyoming ($385,000) and Nevada ($961,000) have comparably tiny subsidies.

Largest average subsidy by state:

Assuming FEMA's full-risk prices do not change and that every renewed subsidized policy takes the maximum 18% premium increase, flood insurance bills tend to rise faster in states where the largest share of policyholders are below the full-risk rate i.e. the rate which they would pay if they weren't subsidized by the previous rate rulings. The country as a whole will see its average bill rise by 7.2%, and the following states will have the largest rate increases over the next year:

• West Virginia (+11.5%)
• Mississippi (+10.2%)
• Louisiana (+8.4%)
• Kentucky (+8.3%)
• Alabama (+8.3%)
• Hawaii (+8.1%)
• Florida (+8%)

A homeowner that is below the full-risk rate will generally see their bill rise by about 17%, as the premium, the largest component of their cost, rises by 18% but some of the other fixed fees do not. The figures above are averages across every flood policyholder in the state, including those who already pay full price and will only see minor changes in their premium, which is why they are lower than 17%.

The length of time that these states will continue to see large bill rises depends not on the share of flood insurance policyholders that are subsidized, but the gap between the current average rate and the true full-risk rate. For example, in West Virginia, 58% of the subsidized policies will need five or more years of rate rises to reach their full rate, indicating that costs will likely increase for the near future.

Top 7 states by expected average bill increase next year

About 42% of flood policies pay more than $10 per year below the full-risk price, meaning that four out of 10 single family primary residences with flood insurance are subsidized to varying degrees. Most of the rest of the policies in the country, 56%, are paying exactly the full-risk price.

The median increase that a subsidized policyholder would pay if they were switched to their full-risk rate policy today is $784 more per year, and the median subsidized policy is going to continue to have some sort of subsidy for 3 more years.

In fact, the number of years policies will remain subsidized is spread out over more than a decade, with a long tail. Almost 22% of subsidized policies will reach their full-risk rate (in other words, lose their subsidy) in the next year, but about 39% will reach that status in the next two to four years, and the remaining 39% in five years or more (17% need eight or more).

Although flood insurance is subsidized, the NFIP is seeking to end subsidization by increasing rates over time, some senators are pushing back: nine of them have asked FEMA to scrap Risk Rating 2.0 and halt premium increases above the statutory minimum of 5%. The letters also asked FEMA to publish data explaining the reasoning for premium increases. They cite FEMA's own estimate that about 77% of policies are more expensive in the new Risk Rating 2.0 than they were under the old system.

NFIP authorization expires on December 11th of this year, the same day the government's funding is set to run out, and there's no guarantee it will continue. The program hasn't had a long-term authorization since 2017; Congress has extended it 36 times on a short-term basis.

Four of the five states the senators represent are in the top five states with the highest share of policies subsidized (West Virginia, Mississippi, Alabama and Louisiana; Texas ranks 17th). Subsidized policies are required under Risk Rating 2.0 to have a maximum 18% premium increase (less if the policy is near the full price) each year; this is called the glide path and it will be in effect until the subsidized policies reach their full risk rate.

Premiums are most but not all of a flood insurance bill, so a subsidized flood insurance policy holder is going to see bill increases of about 17% until they reach their full risk rate. For highly subsidized states like West Virginia and Mississippi, this means that over 60% of policyholders are subsidized and face increases of about 17% a year, which lifts the statewide average bill 10% to 12%. Averaged across all homeowners in the four senators' states where the subsidy share is the highest, the increases in rates range from 8 to 12%, driven by the half to three-quarters of flood insurance policyholders who are on the glide path.

What could happen in December? The flood insurance program has no long-term authorization, so it requires repeated short-term extensions to keep it running, 36 since 2017, with the current one expiring on December 11th, the same day government funding runs out. A 43-day lapse in fall 2025 coincided with a government shutdown in which no new NFIP flood policies were sold or renewed until Congress reauthorized the program.

Short-term authorization could happen again, but if it doesn't, the NFIP program could lapse again and lose the ability to sell new flood policies or renew existing ones. Private flood insurance companies would not be affected. But as long as the most subsidized states see the highest rate increases, political controversy is likely to continue.

How we did it: We used FEMA’s public NFIP policy records (OpenFEMA, “NFIP Redacted Policies,” version 3). For each policy, the file lists what the policyholder pays and FEMA’s own estimate of the “full-risk premium” for that home under its Risk Rating 2.0 pricing system. We pulled every single-family, primary-residence policy in force on Sept. 1, 2026: 2,323,725 records. After removing U.S. territories, policies cancelled before that date and one record with a missing full-risk premium, 2,284,690 policies in the 50 states and D.C. remained.

What “subsidized” means: A policy is subsidized if its premium is more than $10 below FEMA’s full-risk premium for the same home. FEMA moved existing policies to the new pricing as they renewed starting in April 2022, but federal law limits most primary-home premium increases to 18% a year, so homes whose new price is far above their old premium are still catching up. Of all policies, 42.4% are subsidized, 56.0% pay exactly full price, 1.2% are within $10 below it and 0.4% pay more.

 

How we calculated each figure:

• All-in bill: the full yearly amount: premium, reserve fund assessment (18% of premium), $47 federal policy fee and $25 surcharge.
• Extra bill at full price: 1.18 × (full-risk premium − premium), because the assessment is 18% of premium and the fees don’t change. The $1.42 billion is that sum across all 968,811 subsidized policies ($1.20 billion before fees).
• Years left: how many 18% increases a policy needs to reach its full-risk premium, assuming FEMA’s prices don’t change.
• Next year’s bill increase: each subsidized policy’s premium rises 18%, or by what’s left of its gap, and all others stay flat. A state’s figure is total increases divided by total current bills.
• 2030 bill: the median subsidized bill ($1,227 today) after four 18% renewals, capped at full price.
• Coastal: the 23 states with an ocean or Gulf coast; Great Lakes states don’t count.

Data

• MoneyGeek analysis of FEMA OpenFEMA NFIP Redacted Policies, v3, single-family primary-home policies in force Sept. 1, 2026.

 

How flood insurance is priced and the 18% cap

• FEMA, Risk Rating 2.0 Fact Sheet (April 2021)
• FEMA, "Helping your clients understand Risk Rating 2.0"
• FEMA, Risk Rating 2.0 Methodology and Data Sources (April 2021)
• Congressional Research Service, The National Flood Insurance Program: The Current Rating Structure and Risk Rating 2.0 (R45999)

Senators' letters to FEMA

• Sen. Bill Cassidy and colleagues to FEMA Acting Administrator David Richardson, June 2025
• Sen. Bill Cassidy and colleagues to FEMA Acting Administrator Karen Evans, Feb. 3, 2026

NFIP authorization

• NAHB, "National Flood Insurance Program Extended Through Dec. 11" (September 2026)
• The White House, "Congressional Bill H.R. 6500 Signed into Law" (Sept. 2, 2026)

Debt and the taxpayer backstop

• Congressional Research Service, Introduction to the National Flood Insurance Program (R44593)
• Congressional Research Service, NFIP borrowing authority (IN10784)

Flood history for the inland examples

• West Virginia Legislature, House Resolution 19 (2017), Elk River flood
• National Weather Service, Jackson, KY: 1957 flood and 1977 flood
• National Weather Service, St. Louis: December 2015 flooding