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Substantial Damage

NFIP Policy Index

Definition/Description:

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. All structures that are determined to be substantially damaged are automatically considered to be substantial improvements, regardless of the actual repair work performed. If the cost necessary to fully repair the structure to its before damage condition is equal to or greater than 50% of the structure''s market value before damages, then the structure must be elevated (or floodproofed if it is non-residential) to or above the Base Flood Elevation (BFE), and meet other applicable NFIP requirements.

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Supplemental Information for Substantial Damage

Items that should not be counted toward the cost to repair include plans, specifications, survey costs, permit fees, and other items which are separate from or incidental to the repair. This includes demolition or emergency repairs, and improvements to items outside the building, such as the driveway, septic systems, wells, fencing, landscaping and detached structures.

The cost of repairs required to remedy health, safety, and sanitary code deficiencies can be deducted from the overall cost of an improvement, but only if:

  1. an appropriate regulatory official such as a building official, code enforcement officer, fire marshal, or health officer was informed about and knows the extent of the code related deficiencies, and
  2. the deficiency was in existence prior to the damage event or improvement and will not be triggered solely by the fact that the structure is being improved or repaired.

In addition, for any repair required to meet health, sanitary, and safety codes, only the minimum necessary to assure safe living conditions should be deducted. Costs of repairs that are in excess of the minimum necessary for continued occupancy or use will be counted toward the cost of the overall improvement.

Manufactured Homes:

Manufactured homes placed on sites or pads where manufactured homes have incurred substantial damage due to flooding in an existing manufactured home park or subdivision must be elevated to or above the BFE.

A manufactured home that was not substantially damaged but is adjacent to a home that was substantially damaged is not required to be elevated. If a flooded manufactured home in an existing manufactured home park or subdivision is not substantially damaged, but is replaced with a new manufactured home or is substantially improved, the owner has the option of elevating to the BFE or using a 36-inch foundation.

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Last Modified: Thursday, 04-Jun-2009 13:47:45 EDT