Flood Insurance Options Could Ease Rebuilding Costs

October 29, 2004

Under the National Flood Insurance Program (NFIP), individuals and business owners may qualify for financial assistance to cover the cost of rebuilding or relocating their substantially damaged homes or businesses following the flooding in New York from Tropical Depression Ivan or from any flood.

The Increased Cost of Compliance (ICC) provision written into all NFIP policies purchased or renewed since June 1, 1997 provides up to $30,000 to offset the cost to comply with state or community laws or ordinances after a direct loss caused by a flood. The damaged structure must be located in a High Risk Flood Zone “A.” The $30,000 is in addition to the policyholder’s basic coverage; but the total claim, including the cost for ICC, cannot exceed the maximum dollar amount of $250,000.

“Substantial damage occurs when community building officials determine that a structure is damaged to the point that repairs will cost 50 percent or more of the building’s pre-flood market value,” said Mary Colvin, a U.S. Department of Homeland Security’s Federal Emergency Management Agency (FEMA) mitigation officer. “Homeowners and businesses may file an ICC claim if the structure suffered “substantial damage.” There are a few communities in New York State where this coverage is also available for repetitive losses.

ICC funds must be used toward the costs of undertaking a mitigation measure that will substantially reduce or eliminate flood risk. These measures may include elevating the building to or above the flood level adopted by the community, relocating the building out of the floodplain, flood proofing non-residential buildings, or demolishing a damaged building. Repairs and rebuilding done under this program must be done in accordance with local building codes and must comply with local floodplain ordinances.

ICC claims are adjusted separately from flood-damage claims. Appropriate local government officials determine whether the structure has been substantially damaged by flooding. This determination is made when the owner applies for a permit to repair the damaged structure. Once the local government has made that decision, the policyholder should call his or her insurance agent to file an ICC claim.

For more information on ICC coverage, individuals can contact their insurance company or agent, call the NFIP at 1-800-427- 4661, or visit FEMA’s Web site at www.fema.gov/nfip for guidance on reducing losses from future floods.

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