Texas Flood Policyholders May Get Extra Coverage

Flood insurance policyholders in Texas whose structures were damaged by flooding from Hurricane Ike may be eligible for up to $30,000 in coverage in addition to their claims for damages. The extra money can be used by property owners to make their homes or businesses safe from future floods.

The benefit is called Increased Cost of Compliance or ICC coverage, because it helps pay for the increased cost of complying with the building code. It is a part of most National Flood Insurance Program policies.

To qualify for Increased Cost of Compliance, a building must be:

• Covered by a National Flood Insurance Program standard policy,
• Located in a Special Flood Hazard Area, also known as a regulatory floodplain,
• Below the base flood level, and
• Either "substantially damaged" or a "repetitive loss property."

"Substantial damage" has occurred when the cost of restoring a structure to its pre-damage condition equals or exceeds 50 percent of the structure's pre-damage market value. To qualify for Increased Cost of Compliance, which is part of a flood insurance policy, the damage must be due to flooding.

A "repetitive loss property" is one that has suffered two or more flood losses over 10 years with the cumulative cost of repairs equaling or exceeding 50 percent of the value of the structure. Increased Cost of Compliance for repetitive loss structures is available only in communities that have repetitive loss provisions in their floodplain management ordinances.

A policyholder seeking Increased Cost of Compliance funding needs to file a claim that is separate from the basic claim for flood damages. The money can be used to elevate, demolish or relocate the damaged structure. For non-residential structures, the funds can also be used for floodproofing.

In some cases, owners may have the opportunity to assign their Increased Cost of Compliance payments to their communities for inclusion in community-sponsored acquisition programs primarily funded by state and federal agencies.

The total insurance payout including Increased Cost of Compliance coverage cannot exceed $250,000 for a residence or $500,000 for a non-residential structure.

Answers to general flood insurance questions are available from local floodplain administrators, the National Flood Insurance Program (1-800-427-4661), and insurance companies and agents. Information is also available at www.fema.gov and www.floodsmart.gov.

Insurance agents can provide information about purchasing policies. Names of agents who sell policies are available at 1-800-427-2419.