When a property insured by the National Flood Insurance Program (NFIP) suffers severe damage, you may not only face costly repairs, but also the obligation to comply with new building codes or local standards. This is where the Increased Cost of Compliance (ICC) benefit comes into play.
What is the NFIP’s ICC program?
Increased Cost of Compliance (ICC) is coverage included in most NFIP policies, providing up to an additional $30,000 to help cover the costs necessary to elevate, demolish, relocate, or rebuild a property to comply with current building codes after a severe flood.
This coverage is activated only if the local community determines that your property is substantially damaged (generally when the damage exceeds 50% of the building’s value).
What expenses does the ICC cover?
ICC coverage can be used for:
- Raise the home to a minimum height required by flood regulations.
- Demolish structures that no longer comply with current codes.
- Relocate the home to a safer area outside the floodplain.
- Repair or rebuild under new risk mitigation standards.
All this with the aim of reducing the risk of future flood damage.
Who qualifies for this benefit?
To be eligible, you must meet the following requirements:
- Have an active NFIP policy with coverage for buildings.
- Have received an approved claim for direct flood damage.
- Obtain a determination of “substantial damage” or “repetitive loss” from the appropriate local authority.
How to apply for the ICC step by step?
- Document the damage and file your primary flood claim with the NFIP.
- The local authority must issue a letter stating that your property is substantially damaged or has repeated losses.
- Inform your insurer that you will be requesting ICC benefits and submit the official letter.
- Work with professionals (architects, engineers, contractors) to estimate compliance costs.
- Your adjuster or insurer will process the payment, which may be made in installments as you progress with the improvements.
Why is it important to take advantage of this coverage?
Many homeowners are unaware that this benefit is included in their policy. Ignoring it could lead to:
- Fines or legal problems for not rebuilding under the new codes.
- Greater vulnerability to future flooding.
- Duplicate costs if the property is later required to be brought up to standard.
With ICC, you can mitigate future risks, increase the value of your property, and comply with local requirements without bearing the entire cost yourself.
Additional recommendations
- Be sure to keep all official documentation from the municipality or county.
- Consult with a public adjuster if your insurance company creates obstacles or denies your claim.
- Check if there is a deadline for starting construction with the ICC money (usually two years from the first payment).
- If you are rebuilding, consider raising your home even higher than the legal minimum for added safety.