Increased Cost of Compliance (ICC) coverage, available under the Standard Flood Insurance Policy (SFIP), helps policyholders cover the costs of complying with community floodplain management regulations after a flood event. This coverage is triggered when a structure is declared substantially damaged or repetitively damaged, as defined by the local floodplain ordinance, which must meet or exceed the minimum standards set by the National Flood Insurance Program (NFIP). In Maryland, ICC coverage can be used to elevate, floodproof, demolish, or relocate a structure to meet current floodplain management requirements. The maximum ICC coverage available is $30,000. However, the application of ICC coverage is subject to several limitations. For instance, the cost of compliance must exceed $1,000 to be eligible. Furthermore, the ICC coverage cannot be used for improvements that are not directly related to complying with floodplain management regulations. Maryland’s local jurisdictions may have specific ordinances that further define substantial damage and repetitive loss, impacting the applicability of ICC coverage. Refer to 44 CFR Part 59 for NFIP definitions and requirements.

The “50% Rule,” a critical component of floodplain management, dictates that if the cost of improvements or repairs to a structure in a Special Flood Hazard Area (SFHA) equals or exceeds 50% of the structure’s market value before the improvement or damage occurred, the structure must be brought into compliance with current floodplain management regulations. This often involves elevating the structure or floodproofing it. In Maryland, this rule is enforced by local jurisdictions, which adopt and implement floodplain ordinances that meet or exceed NFIP standards. If a homeowner’s project triggers the 50% Rule, they must obtain the necessary permits and ensure the structure meets current elevation requirements. Failure to comply can result in penalties and ineligibility for flood insurance. The 50% Rule significantly impacts the availability and cost of flood insurance. Structures that are not compliant with current floodplain regulations may face higher insurance premiums or even be deemed ineligible for NFIP coverage. Furthermore, the cost of complying with the 50% Rule can be substantial, potentially requiring significant investment from the homeowner. Refer to 44 CFR 60.3 for specific NFIP regulations regarding building standards.

“Substantial improvement” means any reconstruction, rehabilitation, addition, or other improvement of a structure, the cost of which equals or exceeds 50 percent of the market value of the structure before the start of construction of the improvement. “Substantial damage” means damage of any origin sustained by a structure whereby the cost of restoring the structure to its before-damaged condition would equal or exceed 50 percent of the market value of the structure before the damage occurred. These definitions are central to the NFIP and are adopted and enforced by local jurisdictions in Maryland. When a property is determined to be substantially improved or damaged, the owner must bring the entire structure into compliance with current floodplain management regulations. This typically involves elevating the structure so that the lowest floor is at or above the Base Flood Elevation (BFE). Failure to comply can result in denial of flood insurance coverage, fines, and legal action by the local jurisdiction. Maryland’s local floodplain ordinances will specify the exact procedures and requirements for compliance. Refer to 44 CFR 59.1 for definitions.

The Maryland Department of the Environment (MDE) plays a crucial role in floodplain management within the state. MDE is the coordinating agency for the National Flood Insurance Program (NFIP) in Maryland, providing guidance and technical assistance to local jurisdictions to ensure compliance with NFIP regulations. MDE also works with FEMA to update Flood Insurance Rate Maps (FIRMs) and conduct Community Assistance Visits (CAVs) to assess local floodplain management practices. MDE’s responsibilities include reviewing and approving local floodplain ordinances, providing training to local officials, and assisting communities in developing and implementing flood mitigation strategies. MDE also administers grant programs to support flood mitigation projects. The interaction between MDE, local jurisdictions, and FEMA is essential for effective flood risk mitigation in Maryland. MDE acts as a liaison, ensuring that local communities have the resources and support they need to comply with federal regulations and protect their citizens from flood hazards.

A Flood Insurance Rate Map (FIRM) is an official map of a community on which FEMA has delineated both the special flood hazard areas and the risk premium zones applicable to the community. It visually depicts the extent of flood hazards in a community and is used to determine flood insurance rates. A Flood Insurance Study (FIS) is a report that contains detailed engineering data used to develop the FIRM. The FIS includes information such as flood profiles, data tables, and descriptions of the hydrologic and hydraulic analyses performed. In Maryland, FIRMs and FISs are used by local jurisdictions to establish and enforce floodplain management regulations. The FIRM identifies the Special Flood Hazard Areas (SFHAs) where flood insurance is mandatory for properties with federally backed mortgages. The FIS provides the technical basis for these regulations, including the Base Flood Elevation (BFE), which is the elevation to which structures must be elevated or floodproofed. Insurance agents use FIRMs to determine the flood zone of a property and calculate the appropriate flood insurance premium. Refer to 44 CFR Part 65 for details on map revisions.

The Standard Flood Insurance Policy (SFIP) offers two main types of coverage: building coverage and contents coverage. Building coverage protects the physical structure of the insured property, including the foundation, walls, floors, and essential equipment such as plumbing and electrical systems. Contents coverage protects the personal belongings inside the insured property, such as furniture, clothing, and electronics. Both building and contents coverage have limitations and exclusions. For example, building coverage typically does not cover land or landscaping, while contents coverage may have limits on valuable items such as jewelry and artwork. Additionally, both types of coverage exclude certain causes of loss, such as sewer backups (unless directly caused by flooding), earth movement, and damage caused by the insured’s failure to take reasonable steps to protect the property. In Maryland, these limitations can significantly affect policyholders, particularly in areas prone to repetitive flooding. Understanding these limitations is crucial for ensuring adequate flood insurance protection. Refer to the SFIP Dwelling Form and General Property Form for specific coverage details and exclusions.

The Community Rating System (CRS) is a voluntary incentive program that recognizes and encourages community floodplain management activities that exceed the minimum NFIP requirements. Under the CRS, flood insurance premium rates are discounted to reflect the reduced flood risk resulting from community actions. Maryland communities can participate in the CRS by implementing a range of activities, such as providing public information about flood hazards, maintaining open space in floodplains, adopting stricter building codes, and implementing stormwater management programs. These activities are assigned points, and the total points determine the community’s CRS class, ranging from Class 9 (minimal credit) to Class 1 (highest credit). The benefits of participating in the CRS program extend beyond reduced insurance rates. CRS participation can enhance community resilience to flooding, improve public safety, and protect property values. It also fosters a greater awareness of flood risks and encourages proactive floodplain management practices. Refer to the CRS Coordinator’s Manual for detailed information on creditable activities and program requirements.

The NFIP defines “flood” as a general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more properties (at least one of which is your property) from: Overflow of inland or tidal waters; Unusual and rapid accumulation or runoff of surface waters from any source; Mudflow. For a loss to be covered, the flood must be the proximate cause of the damage. The “two-acre rule” means that the inundation must affect at least two acres of normally dry land or two or more properties. Surface water involvement is crucial; the water must be overflowing or accumulating in an unusual and rapid manner. This definition is crucial because it dictates the circumstances under which flood insurance coverage applies. It is based on the NFIP Flood Insurance Manual and relevant federal regulations governing the program.

Increased Cost of Compliance (ICC) coverage is a provision within the NFIP that helps policyholders cover the costs of complying with local floodplain management ordinances or laws after a flood event. It applies when a structure is declared substantially damaged (typically defined as damage exceeding 50% of the structure’s pre-flood market value) or repetitively damaged. The maximum ICC coverage available is \$30,000. This coverage can be used for elevation, floodproofing, relocation, or demolition of the structure. In Maryland, local floodplain management ordinances must meet or exceed the minimum NFIP standards. Therefore, ICC coverage assists policyholders in meeting these local requirements, ensuring compliance with both federal and state regulations. This is outlined in the NFIP Flood Insurance Manual and Maryland’s floodplain management regulations.

The SFIP offers three main forms: the Dwelling Form, the General Property Form, and the RCBAP. The Dwelling Form is for single-family homes and 2-4 family dwellings, with coverage limits up to \$250,000 for the building and \$100,000 for contents. The General Property Form is for non-residential buildings and residential buildings with more than four units, offering higher coverage limits. The RCBAP is specifically for condominium associations, covering the entire building structure. Each form has specific exclusions. For example, the Dwelling Form may have limitations on coverage for basements and certain types of personal property. The General Property Form may have different valuation methods for losses. The RCBAP has specific requirements related to the condominium association’s responsibilities. Understanding these differences is crucial for selecting the appropriate policy and ensuring adequate coverage. These details are found in the NFIP Flood Insurance Manual and the individual policy forms.

The Community Rating System (CRS) is a voluntary incentive program that recognizes and encourages community floodplain management activities that exceed the minimum NFIP requirements. In CRS participating communities, flood insurance premiums are reduced to reflect the reduced flood risk resulting from the community’s efforts. Communities are assigned a CRS rating from 1 to 10, with 1 being the best and resulting in the largest premium reductions. Activities that can improve a community’s CRS rating include: maintaining open space, implementing stricter building codes, providing public information about flood hazards, and conducting drainage improvements. For example, a community that preserves natural floodplain areas may receive credit under the CRS, leading to lower flood insurance premiums for its residents. The CRS program is detailed in the NFIP CRS Coordinator’s Manual.

Filing a flood insurance claim under the NFIP involves several steps. First, the policyholder must notify the insurance company promptly after the flood event. The policyholder is responsible for mitigating further damage and documenting the damage with photographs and videos. An insurance adjuster will be assigned to inspect the property and assess the damage. The policyholder must provide documentation to support the claim, including proof of loss, repair estimates, and inventory of damaged personal property. If the policyholder disagrees with the adjuster’s settlement offer, they have the right to appeal the decision. The appeal process involves submitting additional documentation and requesting a review of the claim. The NFIP Claims Manual provides detailed guidance on the claims process and the policyholder’s rights.

The Flood Disaster Protection Act of 1973 and the National Flood Insurance Reform Act of 1994 mandate that property owners in Special Flood Hazard Areas (SFHAs) who have mortgages from federally regulated or insured lenders must purchase and maintain flood insurance. This requirement applies to properties located in SFHAs, which are areas with a 1% or greater chance of flooding in any given year. If a property owner fails to comply with the mandatory purchase requirement, the lender is required to force-place flood insurance on the property. This insurance typically provides only building coverage and may be more expensive than a policy purchased by the property owner. The mandatory purchase requirement is intended to protect both the property owner and the lender from financial losses due to flooding. These requirements are outlined in the relevant federal legislation and regulations.

Base Flood Elevation (BFE) is the elevation to which floodwater is expected to rise during a base flood, which has a 1% annual chance of occurring. The BFE is a critical factor in determining flood insurance rates and building requirements. Properties built below the BFE are at a higher risk of flooding and will typically have higher flood insurance premiums. Building codes in Maryland require that new construction and substantial improvements in SFHAs be elevated to or above the BFE. The BFE is determined through engineering studies and flood mapping conducted by FEMA. Property owners can determine the BFE for their property by consulting FEMA’s Flood Insurance Rate Maps (FIRMs), which are available online or through local floodplain management officials. Understanding the BFE is essential for assessing flood risk and ensuring compliance with building regulations. Information on BFEs can be found on FEMA’s website and through local government resources.