In the latter part of March 2021, for three consecutive weeks, the community of Birmingham, Alabama experienced severe weather however unlike the past two weeks, flooding and strong winds presented a threat to the city. We observed the saturation of land causing trees to fall and the Smith Lake becoming the culprit to the flood damage to the area. This can really be alerting for this region since it does look like the state is experiencing flooding that's becoming worse each time.
Now, when it comes to flood insurance, this can directly impact you whether you're doing a policy with the National Flood Insurance Program (NFIP) under FEMA or the Private Flood Insurance market. Let's talk about how this can impact you and the things you need to know when it comes to your flood insurance policy when you experience flooding like this.
Now, it's important to note that there will be flood insurance rates increase in the future due to your Birmingham community becoming more flood-prone in a short period of time. If the flood map also shows that the area should be considered under Special Flood Hazard Area (SFHA), then the flood insurance rates can be expected to become more expensive with FEMA and the NFIP. However, this can also mean a good impact if you're doing a policy with FEMA and the NFIP then you might be able to go through the Increased Cost of Compliance (ICC) coverage.
What is the ICC?
The Increased Cost of Compliance (ICC) coverage is an additional property coverage provided by FEMA through the National Flood Insurance Program. This generally provides additional money for the property's flood mitigation compliance purposes of up to $30,000 in order to reduce the flood risk in the future. It's important to note that the increased coverage will be separate from your standard flood insurance property coverage of $250,000 if it's a residential property and up to $500,000 if it's a commercial building.
It's most likely that you're eligible for the ICC if you're one of the impacted properties by the Smith Lake flooding in Alabama. The eligibility for this requires that the property should either be substantially damaged or is considered a repetitive loss.
When we say substantially damaged, this means that the property owner experienced a flood loss on his home that's worth 40 to 50 percent of the house's market value. This means that if you were flooded and the total damage is less than 40% of the house's market value, then you won't be able to get ICC coverage. Now this can be crucial since the market value of properties over at Birmingham and Smith Lake is very high, so you're really going to have to be very careful on reporting the total damage on your residence if you're looking to be eligible through this condition.
Repetitive Loss, on the other hand, means that a property has had two or more flood claims over the last 10 years. Loss history includes all of the ownership on the building since 1978 or since the building's construction after 1978.
What's Flood Mitigation Compliance
When we say flood mitigation compliance, this means that the structure of the building itself should meet the floodplain management ordinances set either by the federal government or the local community. Now, there are four accepted floodplain management activities when it comes to complying with FEMA's flood mitigation standards: elevation, floodproofing, relocation, and demolition.
When we say elevation, this means that the goal of the activity is to raise your property's lowest adjacent grade above the base flood elevation (BFE) of your community. This means that you have to elevate your property's lowest flood at least a foot above the base flood elevation.
For this activity, it's important to note that this is only for non-residential properties. This requires that the commercial properties should be watertight below the BFE by reinforcing your walls, installing a watertight shield for doors and windows, building a drainage collection system, sump pumps, and check valves.
When a property's being relocated, it simply means that you're going to move to another location on the same lot or another lot, but in order to meet compliance standards, you want to make sure that you're at least moving in a lower-risk area. There's no problem with relocating to a new location within the Special Flood Hazard Area (SFHA) or the 100-year flood zone however you're still going to have to make sure that it's going to be compliant with FEMA still. This can be the greatest flood prevention activity that really helped a lot of homeowners avoid the impact of major flooding and significantly reducing the risk of flooding on their property.
Lastly, this activity is only done when the first three are no longer a viable option due to the flood damage being too severe for your property. Now, it can still be possible that you can redevelop the building after demolition however it's important to make sure that the laws and requirements of the Federal, State, and community are followed.
Beyond Flood Insurance
Now, it's also important to shed light on the possible negative impacts of lake flooding and the future risk of flooding in the area on your overall flood insurance purchase. If you're doing private flood insurance, then this could mean that they may choose to pull out from providing Birmingham, Alabama flood insurance due to the high risks that it's presenting to the table. Since FEMA doesn't choose their risks, severe repetitive loss as we mentioned before is a condition to be eligible for the ICC coverage, but private flood may see this as a red flag to continue providing flood policies and decide to non-renew.
It's still important to note that private flood is still a fair market with its own standards and guidelines. In fact, the ICC coverage usually is included in the property's coverage if you're doing a private flood insurance policy.
If you have questions on FEMA ICC coverage, if you're eligible for it, your flood insurance options, or any question about flood, feel free to reach out to us. We'll keep our doors open for you! You can click the links below to get started or watch and subscribe to our YouTube channel where we post flood education videos daily.
Remember, we have an educational background in flood mitigation and we want to share this knowledge with you, so you can be prepared when crap happens.