Tip of the Month September 2007-Increased Cost of Compliance (ICC):

What is the Increased Cost of Compliance (ICC) coverage?

If a flood damages your property, you may be required by law to bring your home up to community and/or state safety standards. If you have NFIP insurance, and your home has been declared substantially damaged by your community, ICC coverage is provided to cover up to $30,000 of the cost to elevate, flood proof, demolish or relocate your property. ICC coverage is in addition to the coverage you receive to repair flood damages; however, the total payout on a policy may not exceed $250,000 for residential buildings and $500,000 for non-residential buildings.

How Much Coverage Is Available
            Flood insurance policyholders in high-risk areas, also known as Special Flood
Hazard Areas, can get up to $30,000 of ICC coverage 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 you can take to comply with your community's floodplain
management ordinance and help reduce your 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.
2.         Relocation. This moves your 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
            You may file a claim for your Increased Cost of Compliance coverage 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 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 file an ICC claim only 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.