The Deluge

Increased Cost of Compliance – How the FEMA Boys Explain It

My flooded dwelling may qualify for additional government funding if it is certified as substantially damaged.  All I need is a local government building inspector to certify that my dwelling was substantially damaged (i.e. more than 50% of market value).  Montgomery County Texas does not employee building inspectors therefore acquiring a certificate is a Catch 22.  I have called everyone from FEMA to city to county to my insurance agent to private building inspectors, I have not even received a return phone call let alone an answer.  So, drink up!  Following are extracts, paraphrasing and commentary on the explanation of the Increased Cost of Compliance documentation at the FEMA.gov site on that confounding creation of circuitous conduits known to the naive as the inter-web.

~ICC Coverage

If your home or business is damaged by a flood, you may be required to meet certain building requirements in your community to reduce future flood damage before you repair or rebuild. To help you cover the costs of meeting those requirements, the National Flood Insurance Program (NFIP) includes Increased Cost of Compliance (ICC) coverage for all new and renewed Standard Flood Insurance Policies.

! How much? How much? How much? How much? How much? How much? How much?

Flood insurance policyholders in high-risk areas, also known as special flood hazard areas, can get up to $30,000 to help pay the costs to bring their home or business into compliance with their community’s floodplain ordinance.

COMMENTARY – One demolition estimate was $15 a square foot which puts my demolition cost at $15,000.  An estimate for a cement foundation was approximately $7 a square foot which puts my new foundation cost at $7,000.  Setting up a manufactured home can run around $5,000.  The rough total here, with the cost of an actual dwelling not included is $27,000.  The ICC stipend is $30,000, as every jerk in every conversation would sarcastically spit, you do the math.

Four Options FEMA Features for Flooded Fugitives

There are four options you can take to comply with your community’s floodplain management ordinance and help you reduce future flood damage. You may decide which of these options is best for you.

  1. Elevation. This raises your home or business to or above the flood elevation level adopted by your community.  THIS IS A POSSIBILITY BUT HOW HIGH?  AT WHAT COST?  ON A SUBSTANTIALLY DAMAGED 50 YEAR OLD DWELLING, REALLY?
  2. Relocation. This moves your home or business out of harm’s way.  MOVING MY TINY 50 YEAR SUBSTANTIALLY DAMAGED HOUSE IS NOT GOING TO KEEP IT FROM GETTING ANY SICKER?
  3. Demolition. This tears down and removes flood-damaged buildings.  TEARING DOWN THE BUILDING, PATHETIC AND SAD AS IT MAY BE, DOESN’T EVEN LEAVE ME A LEAKY ROOF TO LIVE UNDER, AM I MISSING SOMETHING?
  4. Floodproofing. This option is available primarily for non-residential buildings. It involves making a building watertight through a combination of adjustments or additions of features to the building that reduces the potential for flood damage.  THIS ONE DOESN’T EVEN APPLY.

~When to file an Increased Cost of Compliance (ICC) claim

You may file a claim for your Increased Cost of Compliance coverage (ICC) in two instances:

    1. If your community determines that your home or business is damaged by flood to the point that repairs will cost 50 percent (fifty %) or more of the building’s pre-damage market value. This is called substantial damage.
    2. If your community has a repetitive loss provision in its floodplain management ordinance and determines that your home or business was damaged by a flood two times in the past 10 years, where the cost of repairing the flood damage, on the average, equaled or exceeded 25 percent of its market value at the time of each flood. This is called repetitive damage. Additionally, there must have been flood insurance claim payments for each of the two flood losses.

~How to file an ICC claim

Your ICC claim is adjusted separately from the flood damage claim you file under your Standard Flood Insurance Policy. You can only file an ICC claim if your community determines that your home or business has been substantially damaged or repetitively damaged by a flood. This determination is made when you apply for a building permit to begin repairing your home or business.

If your community does determine that your home or business is substantially or repetitively damaged, a local official will explain the floodplain management ordinance provisions that you will have to meet. You may also want to consult with the local official before you make the final decision about which of the options to pursue.

Once your community has made this determination, contact the insurance company or agent who wrote your flood policy to file an ICC claim. Your insurer will assign a claims representative who will help you process your ICC claim. You should start getting estimates from contractors to take the necessary steps to do one of these:

  1. elevate
  2. relocate
  3. flood-proof
  4. demolish

~How your ICC claim payment is handled

You may be able to receive a partial payment once the claims representative has:

  1. a copy of the signed contract for the work,
  2. a permit from the community to do the work, and
  3. a return of your signed ICC Proof of Loss.

If the work is not completed, you must return any partial payment to your insurer.

When the work is completed local officials will:

  1. inspect and
  2. issue a certificate of occupancy or a confirmation letter.

Once you submit this document to your claims representative, your insurer will pay the final installment or full payment.

ICC claims will only be paid on flood-damaged homes and businesses, and can only be used to pay for costs of meeting the floodplain management ordinance in your community.

IN SUMMARY

  1. A dwelling’s repair cost must be greater than 50% of the pre-damaged market value, this is defined as substantial damage, to qualify for ICC.
  2. ICC maximum amount is $30,000 and can be spent to elevate the current structure, relocate the current structure, or demolish the current structure.
  3. In Montgomery County Texas the person who must certify that the dwelling is substantially damaged is (believed to be) the local county commissioner, in lieu of a county building inspector.
  4. Payment of ICC funds, after certification of substantial damage, requires signed contracts, building permits, signed Proof of Loss, inspection, and certificate of occupancy.