Home compliant with FEMA flood level guidelines.
Home compliant with FEMA flood level guidelines. Photo by Sharon Karr/FEMA.

Is flood insurance your problem? It could be, given the changes being debated in the federal flood insurance system—and the crippling costs those changes could produce.

While most of the attention on this issue has focused on a congressional effort to delay huge increases in National Flood Insurance Program (NFIP) premiums, remodelers are concentrating on a related matter: The point at which a house with flood insurance is deemed to have undergone “substantial improvement” and thus must follow the latest codes.

The Magic Number 

Currently, once the cost of a project exceeds 50% of a flood-prone home’s market value—not including the land it’s built on—the homeowner is required to bring that home up to the flood code determined by the NFIP and local municipality. Generally, such flood code updates would include costly improvements such as raising the home’s foundation.

Thus, if a house is worth $150,000, a homeowner could theoretically budget a project under $75,000 without worrying about paying tens of thousands of dollars to bring the house up to code.

Problem is, the 2012 Biggert-Waters Act—the legislation passed two years ago that revamped the NFIP—lowers that ceiling to 30% when fully implemented. On a $150,000 home, that’s a threshold of $45,000—the price of a new kitchen, and not a fancy one.

A Shaky Solution

A bill passed by the Senate and legislation under discussion in the House would restore the 50% threshhold, but as of press time there was no indication either it or a comprehensive delay in NFIP rates would get through Congress.

But that’s not the only place uncertainty exists. Local jurisdictions set their own rules on how NFIP is implemented in their area. Thanks to the arrival of new flood maps created in response to Biggert-Waters, a number of jurisdictions are reviewing those rules. As a result, there’s no hard and fast rule to estimate whether a home is subject to substantial improvement thresholds.

Know the nuances

Robert Criner, founder of Criner Remodeling in the flood-prone city of Newport News, Va., knows a thing or two about substantial improvement. In 2003, Hurricane Isabel forced his community to rethink how they built—and remodeled—their homes. 

His No. 1 piece of advice: Stay informed. “Get educated before you enter the municipality,” Criner says. Knowing the nuances of your local government is key. 

To keep pace, Criner relies on information provided by the Peninsula Remodelers Council and the National Association of Home Builders. He also employs Internet searches so that by the time he meets with a client he has a good idea of the local rules on substantial improvement.

In his 23 years of owning his business, Criner has found that knowing how to navigate the bureaucratic maze provides a competitive advantage. 

“You gain a huge edge, not only by being the most educated, but by finding ways to help [clients] that nobody else will find,” Criner says. By knowing local codes and recommending preventative flood measures like flood vents and raised air conditioner units, he’s able to save some of his clients thousands of dollars annually.
And in the long run, Criner says it pays off: “In 10 years, they’ve just bought a remodeling project.”