Insurance coverage and ICC (elevation) procedures

There has been some confusion recently, regarding the relationship of insurance coverage, and the Presidential declaration of a disaster.

A Presidential disaster declaration is NOT required for flood insurance to cover damage related to recent flooding.   The declaration only affects whether or not FEMA will get involved in regards to disaster assistance, which is not the same as flood insurance.  If you have flood insurance, contact your agent NOW, and request help.

Likewise, should you be required to elevate your home , the National Flood Insurance Program provides what is called Increased Cost of Compliance (ICC) coverage in the standard flood insurance policy.  This, too, is available without a Presidential disaster declaration.

Note… Substantial Damage means damage…sustained by a structure whereby the cost of restoring the structure to is before damaged condition would equal or exceed 50 percent of the market value of the structure before the damage occurred. Repetitive Loss means flood-related damages sustained by an insured structure on two separate occasions during a 10-year period ending on the date of the event for which the second claim is made, in which the cost of repairing the flood damage, on the average, equaled or exceeded 25% of the market value of the structure at the time of each such flood event.

Here is the most basic description of when you can get money to elevate a home if you have flood insurance.  This information comes from FEMA publication Increased Cost of Compliance Coverage - Guidance for State and Local Officials.  (Section 2, page 2-2.)

When....

- A building is covered by a Standard Flood Insurance Policy, and

- Sustains substantial or repetitive loss due to a flood, and

- Must now be brought into compliance with State or Local floodplain management laws or ordinances,

Then...

The NFIP (National Flood Insurance Program) will pay up to $30,000 to elevate, demolish, relocate, or floodproof (floodproofing allowed for non-residential only) the building when any of these actions are required to comply with State or local codes and floodplain ordinances.

The steps to take regarding ICC coverage are:

1)   Determine if your home/building is in either the floodway or flood fringe of Flood Zone A (ask your Area Plan Director).  

2)   If yes:   Get a copy of the Plat page, showing your property, the flood zone, and the 100 year flood height.

3)   Get a copy of your home’s assessed (pre-flood) value from the County Assessor, or a professional appraisal of your home (structure only).

4)   Get an estimate from a contractor, for repairing the flood damage to your home. The estimate should include the cost of both material and labor – even if labor/material is donated or if the owner plans to do the work.

5)   If the structure is either substantially damaged (as defined above), or is a repetitive loss structure (as defined above), discuss the compliance requirements and choice of mitigation projects with Area Plan. Have a contractor estimate the cost to bring the home into compliance by elevation, demolition, or relocation.  (Elevation involves having a privately-contracted surveyor conduct a flood elevation survey, to show how high the home must be elevated, and ensuring that your building contractor is building the home to this height.)

6)  Review and permits:

a. If it was determined that your home is located in the flood way, take the contractor's estimate, building plans, and the surveyor's report to your Area Plan Director, requesting they submit the plans for DNR Review.  Be sure to write the words "Flood Victim" at the top of DNR Form 50356. Once the DNR review is complete, you will receive the outcome of that review in writing. Once the DNR has reviewed and approved your plans, take a copy of the approval to your Area Plan Director, requesting a local permit; or

b.   If it was determined that you home is located in the flood fringe, take the contractor's estimate, building plans, and the surveyor's report to your Area Plan Director, requesting a local permit. (No DNR review needed.)

7)   Provide copies of all the review/permitting documents (DNR and/or local permits) and building plans which demonstrate compliance with NFIP and local floodplain regulations to your insurance claims adjuster. Upon review, the insurance claims adjuster confirms that the project is eligible and gives the policyholder an ICC Proof of Loss form. After the Proof of Loss and permit has been returned to the insurance claims adjuster, an initial payment will be made (typically 50% of the project cost).  Proceed with work.

8)   Upon completion, submit an elevation certificate for the “as-built” construction of your home to Area Plan (and DNR if home is in the flood way). Once you demonstrate to the adjuster that your home was built in compliance (elevation certificate and/or certificate of occupancy), you will be issued a check for the rest of the work, up to a maximum of $30,000.

9)   Be sure to provide a copy of the elevation certificate for your elevated home to your insurance agent. Ask your agent to re-rate your home based on the new elevation so that the cost of your flood insurance can be lowered, due to the reduced likelihood of flood damage. 

10) Buy a NOAA radio! Pack an emergency kit! Leave before flooding! Don’t make somebody risk their life to rescue you, when planning ahead could prevent the need.

For further assistance, contact your insurer or the DNR Floodplain Management Section (317) 232-4160 or toll free at (877) 928-3755.

Prepared by Dave McDowell, Director, Carroll County Emergency Management, with information current as of 3/25/2009.