Victims with Flood Insurance May be Eligible for Up to $30,000 Additional Aid

August 18, 2005

For some flooding victims of Hurricane Dennis, up to $30,000 may be available to help pay for bringing their homes and businesses into compliance with floodplain ordinances.

That money, which is available to policyholders through the National Flood Insurance Program, can be used to make their home or business safe against future floods.

If a building has been severely or repeatedly flooded, explained Federal Coordinating Officer Justin DeMello of the Department of Homeland Security’s Federal Emergency Management Agency, it may be designated by the local building department as “substantially damaged” or a “repetitive loss property.” The policyholder is then required to rebuild it in a flood-safe way, which usually means raising or moving the structure. However, that is when the extra funds to pay for future risk reduction, up to $30,000, may also kick in.

The benefit is called “Increased Cost of Compliance” coverage because it helps pay for the increased cost of complying with local codes for floodplain management. Policyholders whose noncompliant buildings are located in areas at high risk of flooding and have been declared substantially damaged may qualify for this coverage.

Dennis victims may also have a separate source of money available in their regular homeowners insurance policy or wind insurance policy, under the “Law or Ordinance” clause in those policies. Coverage under that clause may help the property owner with the additional cost of meeting the current building codes. Property owners should contact their insurance agents to ask about this valuable coverage.

“You may have tens of thousands of dollars available to help you rebuild safely,” said DeMello. “We strongly encourage flood insurance policyholders who have substantial or repeated flood damage to contact their local building departments and ask if they may be eligible to file an Increased Cost of Compliance claim.”

The Increased Cost of Compliance claim is filed separately from any insurance claim for flood damage, although it is part of the same policy and is filed with the same insurance company. The money is over and above any claim settlement from flood insurance policies.

The insurance money can be used in combination with low-interest disaster loans from the Small Business Administration, and with disaster-related grants or any other aid, to reduce the cost of making one’s home or business safe from flooding. It can be used to help elevate, demolish, or relocate homes or businesses out of the floodplain. It can also be used to floodproof non-residential buildings in other ways. The work must be done in compliance with local building and floodplain ordinances.

“It doesn’t make sense to rebuild without ensuring the structure will be more flood-resistant than it was before,” said State Coordinating Officer Craig Fugate. “That is exactly why these policies were created – to reduce the risk of future damage.”

Property owners can purchase flood insurance through most major insurance carriers who sell homeowners or business policies, or by calling the National Flood Insurance Program at 1-800-427-4661.

In summary, local officials are responsible for:

* determining “substantial damage” or “repetitive damage”
* determining the cost of repairing the structure’s flood damage
* issuing permits and verifying compliance.

Property owners are responsible for:

* contacting their insurance company or agent to file an Increased Cost of Compliance claim
* obtaining the necessary permits
* submitting building plans
* submitting a copy of the construction contract
* supplying detailed information to officials if the amount of damage determination is contested.

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