4 Ways Increased Cost of Compliance Coverage Helps Clients
Increased Cost of Compliance Coverage helps homeowners to mitigate future losses on insured property. Beyond filing a claim for loss due to flooding, policyholders with this coverage may also file a claim to help them comply with state and local floodplain management laws and ordinances in their reconstruction and repair efforts.
“What is an ICC premium charge?”
The acronym ICC stands for Increased Cost of Compliance. This is coverage to help cover the costs of bringing your home up to current community standards.
An Increased Cost of Compliance claim is filed separately from a flood damage claim. To qualify, the building must have sustained at least 50% damage from a flood within the past four years, or it needs to meet the Federal Emergency Management Agency’s (FEMA) criteria for a repetitive loss structure.
If accepted, an Aon Edge policy can pay up to $30,000 through the Increased Cost of Compliance premium to help homeowners mitigate potential future flood damage. There are four options you can choose from, or you can combine across categories:
#1 – Elevation
This is the most common type of flood mitigation. In the event of a flood on your property, the expected level of surface water is called the Base Flood Elevation (BFE). When you elevate your building, you’re raising the lowest floor to that height or above. FEMA puts all these numbers on the Flood Insurance Rate Map (FIRM) on the FEMA Flood Map Service Center website.
You don’t necessarily need to elevate the whole house. Think of the key utilities in your house that could be damaged in the event of a flood:
Moving some or all of these utilities into a location above the Base Flood Elevation can better protect your home. Many people have these necessary pieces of equipment in the basement, garage, or first floor of a home. You could utilize an attic or spare closet situated above the Base Flood Elevation, or even just an elevated platform in the current location.
#2 – Floodproofing
This applies only to non-residential structures. According to FEMA, there are a few ways to employ these mitigations:
Dry floodproofing - A combination of measures that results in a structure, including the attendant utilities and equipment, being watertight with all elements substantially impermeable to the entrance of floodwater and with structural components having the capacity to resist flood loads.
Wet floodproofing – The use of flood-damage-resistant materials and construction techniques to minimize flood damage to areas below the flood protection level of a structure, which is intentionally allowed to flood.
Think of measures like sealing and shielding of windows and doors, installing drainage and sump pumps, and anchoring your building against flotation, lateral movement or collapse.
#3 – Relocation
No one really likes to move, least of all to move an entire house. But sometimes removing a structure from the floodplain is the best option. This may entail moving the structure to a higher elevation on the existing property, or to an altogether new property on a different Base Flood Elevation. As you can imagine, this is no easy feat. A home moving contractor may consider:
The condition and structural soundness of the home
The home’s size, design, and shape
Construction materials, e.g. masonry vs. wood
The presence of a crawlspace or basement
In most cases, the home structure is being lifted onto a flatbed truck, so it has to withstand that kind of major movement.
#4 – Demolition
When the flood damage is so severe that Elevation, Floodproofing or Relocation don’t apply, sometimes the only viable option is to demolish the structure and start over. After demolition, the property owner may be allowed to redevelop the site.
These different mitigations exist on a spectrum of cost and effort. None of them are easy, but fortunately Increased Cost of Compliance coverage can provide some support if one or a combination of these measures become reality.
For more detailed information on Increased Cost of Compliance claims or to find out if you qualify, contact us! We’d love an opportunity to speak with you about this valuable coverage.