Flood Insurance Can Cover 'Compliance Costs'
Funding for Changes to Severely Damaged Homes or Businesses
Release Date: October 15, 2004
Release Number: 1558-055
» More Information on West Virginia Severe Storms, Flooding and Landslides
Charleston, W. Va. -- When properties in flood-prone areas are severely damaged in storms like Hurricane Ivan, flood insurance can provide funding for measures that may be required to make them safer next time.
Most flood insurance policies include Increased Cost of Compliance, or ICC, coverage. Those benefits are triggered when flooding repeatedly or severely damages a building and a local floodplain ordinance requires the owner to make protective changes to the property. Such measures are known as mitigation and can include elevating a building above the base flood elevation, relocating it to a new site, demolishing the building or floodproofing (non-residential buildings only).
Under the National Flood Insurance Program (NFIP), eligible home or business owners can collect up to $30,000 in ICC benefits beyond what's needed to repair a building. Policyholders file separately for the "compliance benefits" and use them to finance the mitigation measures.
The Federal Emergency Management Agency (FEMA) administers NFIP, which underwrites the sale of flood insurance policies by commercial insurance companies.
"Frustration over the cost of making a building safe from flooding can be alleviated with ICC coverage," said Lou Botta, federal coordinating officer for the Ivan disaster. "Property owners should be mindful of this important aspect of flood insurance."
"West Virginians who have endured repeated flooding can take advantage of the additional compliance coverage," said Steve Kappa, state coordinating officer. "But they have to have flood insurance in the first place."
Flood insurance policy holders are eligible to file for ICC benefits if their community floodplain administrator determines one of the following:
- Their property is "substantially damaged," meaning that the cost to repair a flooded building is 50 percent or more of its pre-disaster market value.
- The property sustained "repetitive damage," providing that the community's floodplain ordinance includes a repetitive damage provision. This term applies to homes or businesses that have been damaged by flooding in the past 10 years, where the cost of repairing the damage cumulatively equaled or exceeded 50 percent of the property's market value at the time of the flood. There must have been payments of flood insurance claims for the flood losses - and the community's floodplain management ordinance must have a repetitive loss provision.
For more information on ICC coverage, call your insurance company or agent, or call the NFIP at 1-800-427-4661.
On March 1, 2003, FEMA became part of the U.S. Department of Homeland Security. FEMA's continuing mission within the new department is to lead the effort to prepare the nation for all hazard's and effectively manage federal response and recovery efforts following any national incident. FEMA also initiates proactive activities, trains first responders, and manages the National Flood Insurance Program and the U.S. Fire Administration.
Last Modified: Friday, 15-Oct-2004 13:49:47