Increased Cost of Compliance Coverage

If your customer's home or business is damaged by a flood, they may be required to meet certain building requirements in their community to reduce future flood damage before they repair or rebuild. To help 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 Coverage Is Available?

Flood insurance policyholders in high-risk areas, also known as special flood hazard areas, can get up to $20,000 to help pay the costs to bring their home or business into compliance with their community's floodplain ordinance.

Four Options Covered

There are four options your customer can take to comply with their community's floodplain management ordinance and help reduce future flood damage. They may decide which of these options is best for them.

1. Elevation This raises your customer's home or business to or above the flood elevation level adopted by their community.
2. Relocation This moves your customer's home or business out of harm's way.
3. Demolition This tears down and removes flood-damaged buildings.
4. Floodproofing This option is available primarily for nonresidential 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.

When to File an ICC Claim

Your customer may file a claim for Increased Cost of Compliance coverage in two instances:

1. If  your customer's community determines their home or business is damaged by flood to the point that repairs will cost 50 percent or more of the building's pre-damage market value. This is called substantial damage.

2. If your customer's community has a repetitive loss provision in its floodplain management ordinance and determines that their 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

ICC claims are adjusted separately from the flood damage claim filed under a Standard Flood Insurance Policy. An ICC claim can only be filed if your customer's community determines that their home or business has been substantially damaged or repetitively damaged by a flood. This determination is made when your customer applies for a building permit to begin repairing their home or business.

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