Increased Cost of Compliance (ICC)

 

Increased Cost of Compliance (ICC)

Increased Cost of Compliance (ICC) coverage is one of several resources for flood insurance policyholders who need additional help rebuilding after a flood.  It provides up to $30,000 to help cover the cost of mitigation measures that will reduce flood risk.  ICC coverage is a part of most standard flood insurance policies available under FEMA’s National Flood Insurance Program (NFIP).

If a home or business is damaged by a flood, the property owner may be required to meet certain building requirements in your community to reduce future flood damage before  the property owner can 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.

ICC coverage provides payment to help cover the cost of mitigation activities that will reduce the risk of future flood damage to a building.  When a building covered by a Standard Flood Insurance Policy suffers a flood loss and is declared to be substantially or repetitively damaged, ICC will pay up to $30,000 to bring the building into compliance with State or community floodplain management laws or ordinances.  Usually this means elevating or relocating the building so that it is above the base flood elevation (BFE).  Non-residential structures may also be floodproofed.  ICC coverage applies solely to buildings and only covers the cost of the compliance measures undertaken.  It is filed separately from the normal flood insurance claim.

Guidance for Local Officials

ICC Coverage: Guidance for State and Local Officials provides information on the Increased Cost of Compliance coverage and how it relates to communities’ administration of floodplain management laws or ordinances following a flooding event.  Increased Cost of Compliance (ICC) Coverage: Guidance for State and Local Officials  

Determining Who is Eligible
In addition to being insured under the NFIP, a building must meet one of two conditions to be eligible to receive ICC coverage; it must have been either

1) determined to be substantially damaged or

2) meet the criteria of a repetitive loss structure.

Definitions

  • Substantial damage is the determination by the community that damage due to flood has equaled or exceeded 50 percent of the value of the building. When repaired, the building must meet local floodplain management ordinances.  If the total damage from flooding is less than 50 percent of the market value of the building, ICC coverage is not available.
  • Repetitive loss means that a building covered by flood insurance incurred flood-related damage two times over a period of 10 years, and that the cost of the repairs was, on the average, at least 25 percent of the market value of the building before the damage occurred each time. 
    • This applies only if the community has adopted a repetitive loss provision in the local floodplain management ordinance, and a flood insurance claim must have been paid in both cases.  The combined damage total must be 50 percent of the value of the building before the damage occurred, but it need not be evenly distributed.  So, if the damage was 35 percent of the value of the building in the first event and 15 percent of the value of the building in the second event, the policyholder would qualify for ICC coverage.

As a property owner, 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 elevate, relocate, floodproof, or demolish.

 

Four ICC Options

There are four options you can choose, or any combination of, to help you reduce future flood damage.  You should consult with your local floodplain administrator to help determine which option is best for your property.

  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 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.

 

Using ICC in Concert with FEMA Mitigation Grants

In some cases, individual policyholders can take advantage of Federal grant money to supplement the cost of mitigation activities.  Policyholders can assign their ICC benefits to their community and enable the community to file a single claim on behalf of a community mitigation project.  FEMA will count the ICC claim monies as non-Federal matching funds when applying for mitigation grants, because ICC coverage is a direct contract between the policyholder and the insurer.  The community can then use FEMA mitigation grant funds to help pay for any additional portion of the cost of elevation, floodproofing, relocation, or demolition that is more than the ICC claim payment.  It is extremely important for policyholders and community officials to work closely together at every stage of this process.  Individual participation in a FEMA-funded community mitigation project is voluntary and the community is required to provide mitigation funds to any property owner whose ICC payment was counted towards the matching funds.  

Increased Cost of Compliance (ICC) and Hazard Mitigation Assistance (HMA) Non-Federal Cost Share  w-17066 – Increased Cost of Compliance (ICC) and Hazard Mitigation Assistance and the follow up W-17068 Bulletin.

 

Answers to Frequently Asked Questions About ICC

February 28, 2017

Answers to Frequently Asked Questions About Increased Cost of Compliance    This document presents answers to frequently asked questions about Increased Cost of Compliance (ICC) and explains how the process works.

 

Additional ICC Resources

  •  ICC Policyholder’s Processing Checklist   This checklist will help you understand what must be provided to your flood insurance company or  adjuster (Insurer) to be eligible for up to $30,000 under the Standard Flood Insurance Policy through ICC. 

For more information: link to FEMA’s ICC webpage.  

 

Local Success Using ICC

Louisville Metro

At the 2017 KAMM conference Louisville MSD presented an excellent example of how to use ICC funds.  In 2015 floods caused 16 homes to be substantially damaged in the Louisville Metro area. 

Link to this local success story that explains how to apply for ICC, the Pros and Cons and how to proceed through the process.  

 

In Kentucky, as of November 2018

ICC have been filed 142 times since 2003 in 42 Kentucky communities and seven additional ICC claims are pending.   Three of the ICC claims are for repetitive loss and the remaining 139 is substantial damage.  Mitigation includes

  • 76 for Elevation
  • 46 for Demolition
  • 20 for Other (Relocation or Floodproofing)

NFIP communities with ICC closed claims

ASHLAND        

BELFRY                       

CALVERT CITY               

CATLETTSBURG                  

CLAY CITY                     

EAST POINT                    

FRANKFORT                     

GARRETT                       

GARRISON                    

HARRODSBURG                   

HENDERSON                    

HIGHBRIDGE                    

HUDDY                         

INEZ                          

LA CENTER                      

LEXINGTON                    

LIBERTY                       

LOUISVILLE                    

MIDDLESBORO                   

MOREHEAD                      

MOUNT STERLING                

NICHOLASVILLE                 

OLIVE HILL                    

OWENTON                       

PADUCAH                       

PARIS                         

PIKEVILLE                     

PRESTONSBURG                  

PROSPECT                      

RACCOON                       

RICHMOND                      

SALT LICK                     

SALYERSVILLE                  

SPRINGFIELD                    

STANFORD                      

STURGIS                       

VAN LEAR                      

VERSAILLES                    

WAYLAND                    

WEBBVILLE                     

WEST POINT                  

WILMORE