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

December 13, 2004

Eligible flood victims may qualify for up to $30,000 in additional funds to help pay the cost of bringing their homes and businesses into compliance with floodplain ordinances and make them safe against future floods.

Called “Increased Cost of Compliance” (ICC) coverage because it helps pay for the increased cost of complying with building codes, this benefit is a part of National Flood Insurance Program (NFIP) policies administered by the Department of Homeland Security’s Federal Emergency Management Agency (FEMA).

If a building has been severely or repeatedly flooded, it may be designated by the local government building inspection 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. This is when ICC coverage may kick in.

The ICC 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.

“It doesn’t make sense to rebuild without ensuring the structure will be more flood-resistant than it was before,” said Craig Fugate, state coordinating officer. “This program will reduce risk of future damage.”

Additional funds to bring homes into compliance with floodplain ordinances and safeguard against future floods may also be available under the Law or Ordinance clause in homeowners or wind policies. The funds may assist with the additional cost of meeting current building codes, including floodplain management codes. Property owners should contact their local insurance agent to ask about this valuable coverage.

“These funds are valuable sources of mitigation money that are sometimes overlooked,” said Bill Carwile, federal coordinating officer. “We encourage NFIP policyholders who have substantial or repeated flood damage to contact their local building departments and ask if they may be eligible to file an ICC claim.”

The money can be used in combination with low-interest disaster loans from the U.S. Small Business Administration (SBA) or disaster-related grants to reduce the cost of making a 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 flood-proof nonresidential buildings in other ways. The work must be done in compliance with local building and floodplain ordinances.

Property owners can purchase flood insurance through most major insurance carriers that sell homeowners’ or business policies, or by calling the NFIP at 1-800-427-4661.

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