Guides
The federal role in home insurance
Washington does not regulate homeowners policies, but it runs flood insurance, studies the market, sets mortgage rules and pays disaster aid. Where it stops.
The federal government sells and underwrites one kind of property coverage directly, flood insurance through the National Flood Insurance Program. For everything else in a homeowners policy, including wind, fire, theft and liability, it leaves regulation to the states. Its other roles are indirect: studying the market, setting insurance requirements on federally backed mortgages, and providing disaster aid that is separate from, and smaller than, insurance.
Knowing which of those is in play for your problem tells you whom to call.
The starting point: the states regulate
Under the McCarran-Ferguson Act, state law governs the "business of insurance," and federal law does not override it unless Congress specifically says so (15 U.S.C. 1012). That is why rates, forms, licensing and complaints sit with your department of insurance. See who regulates homeowners insurance? for that side of the picture. Everything below is a carve-out or a supplement.
Flood: the one direct federal product
The National Flood Insurance Program, run by FEMA, exists because private insurers largely stopped covering flood in the 1960s. The terms of the standard policy are federal regulations. Key facts, as of the dates shown:
- Limits. Residential coverage is $250,000 for the building and $100,000 for contents (FEMA Flood Insurance Manual, October 2025).
- Size. 4,436,679 policies and about $1.23 trillion of coverage as of September 30, 2026, according to FEMA's NFIP by-the-numbers data.
- Pricing. Risk Rating 2.0 started with new policies on October 1, 2021, and with renewals from April 1, 2022. Most increases are capped at 18 percent a year by statute.
- Authority. The program is authorized through December 11, 2026 under P.L. 119-103. It lapsed for 43 days from October 1 to November 12, 2025, and again February 1 to 3, 2026; both lapses were fixed retroactively. Existing policies and claims continue during a lapse. See NFIP reauthorization and what a lapse means for you.
Many NFIP policies are sold and serviced by private write-your-own insurers, but the federal government carries the risk. For the details see NFIP flood insurance explained.
Federal law also requires flood coverage on mortgages in special flood hazard areas when the lender is federally regulated or the loan is purchased by Fannie Mae or Freddie Mac (42 U.S.C. 4012a). The borrower must buy at least the lesser of the loan balance or the NFIP maximum.
Mortgage rules that shape your homeowners policy
Federally backed mortgage programs do not regulate insurers, but they tell borrowers what to buy:
- Fannie Mae and Freddie Mac cap required deductibles at 5 percent, including wind. Effective March 18, 2026 they no longer require a replacement-cost-based minimum coverage test for one- to four-unit homes, though the dwelling must still be insured on a replacement-cost basis and roofs may be insured at actual cash value. See Fannie Mae and Freddie Mac homeowners insurance requirements.
- FHA, VA and USDA have their own property insurance conditions. See FHA, VA and USDA homeowners insurance requirements.
- Force-placed coverage. If your insurance lapses, a lender can buy a policy on your behalf and charge you (force-placed insurance).
Studying the market
Congress created the Federal Insurance Office within the Treasury Department. By statute (31 U.S.C. 313), the FIO monitors the industry, tracks access to affordable insurance and coordinates international insurance policy, but nothing in the section gives Treasury general supervisory or regulatory authority over insurance, and it does not preempt state laws on rates, premiums, underwriting or sales practices.
Its most relevant homeowners work is analytic. In January 2025, the FIO published a study of more than 246 million policies from 2018 to 2022, collected with the NAIC and state regulators. It found that inflation-adjusted average premiums rose 8.7 percent faster than inflation over that period and that the nonrenewal rate rose to 1.20 percent in 2022 from 1.05 percent in 2018. It reported that homes in the top 20 percent of ZIP Codes by expected climate-related building losses paid on average $2,321 per policy, 82 percent more than the lowest-risk 20 percent ($1,277).
The Government Accountability Office reported in 2026 (GAO-26-107867) that average premiums rose about 3 percent after inflation from 2019 to 2024, but more in disaster-prone areas, with some southern coastal areas at high wind risk seeing real increases of 25 percent or more. Both are descriptions, not rules.
Disaster aid is not insurance
After a presidentially declared disaster, FEMA's Individuals and Households Program and Small Business Administration disaster loans may help. These are caps and conditions, not a replacement for a policy: FEMA says household assistance is "not a substitute for insurance." Insurance proceeds also affect eligibility, because federal aid generally cannot duplicate what a policy pays. See FEMA disaster assistance vs insurance: what each pays.
Other federal programs touching property insurance
- Terrorism risk. The Terrorism Risk Insurance Program, administered by Treasury with the FIO, shares losses from certified acts of terrorism; the 2019 reauthorization extended it through December 31, 2027. It is aimed mostly at commercial insurance, not the typical homeowners policy.
- Flood mapping and mitigation grants. FEMA publishes flood insurance rate maps and funds mitigation projects, both of which affect who must buy flood coverage.
- Antitrust, privacy and fair-housing law. These apply to insurers as to other businesses, to the extent state insurance regulation does not occupy the field.
Where the debate stands
Rising premiums, nonrenewals and state-backed insurers like Citizens and the California FAIR Plan have raised the question of whether Washington should do more, for example by backstopping catastrophe reinsurance. Proponents say private markets cannot price some correlated risks affordably. Critics say a federal backstop moves risk to taxpayers and subsidizes building in harm's way, and some prefer to strengthen state oversight. The proposals are covered in federal catastrophe reinsurance proposals.
Which government to call
| Your problem | Who handles it |
|---|---|
| Denied or underpaid homeowners claim | State insurance department |
| Premium increase or nonrenewal notice | State insurance department |
| NFIP flood claim | The NFIP insurer, then FEMA's appeal process |
| Lender forcing a policy on you | Your lender, then the CFPB or your state |
| Disaster assistance | FEMA, SBA |
Key takeaways
- Homeowners insurance is state-regulated; the main federal product is NFIP flood insurance.
- Federal mortgage rules, not federal insurance regulation, are what shape many lender insurance requirements.
- The Federal Insurance Office studies and advises but has no general authority over insurers or rates.
- FEMA and SBA aid is limited and is not a substitute for a policy.
- Larger federal catastrophe proposals are still bills, not law.