Increased Cost of Compliance (ICC)

 

Increased Cost of Compliance (ICC) Overview

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.

 

ICC coverage is in addition to the coverage for the repair of the building’s actual physical damage caused by flooding. The maximum combined amount payable for both the ICC claim and the direct loss claim cannot be greater than the maximum limits of coverage for the type of building:

  • $250,000 for residential and $500,000 for commercial properties. If you receive payment for the maximum coverage limits, you are not able to receive the $30,000 ICC benefit.
  • Work closely with your flood insurance adjuster and your local permitting office to determine your eligibility for ICC and do not begin repair work on your structure before filing an ICC claim.

 

Answers to Frequently Asked Questions About ICC

February 28, 2017

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

Link to FEMA P-1080, Answers to Frequently Asked Questions About Increased Cost of Compliance.

 

 

Additional ICC Resources

 

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

 

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.

 

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.  

Link to Using ICC (Increased Cost of Compliance) Funds for Mitigation – Lori Rafferty