Substantial Damage: Understanding the FEMA Rule (VIDEO)

Hi, my name is John Lawless, staff attorney with Bay Area Legal Services’ Disaster Relief Team and the Florida Disaster Legal Aid Helpline. I’m here with my colleague Jason to discuss some simple steps anyone can take to avoid common issues while recovering from disaster.

Today we will talk about the FEMA Substantial Damage Rule. The "Substantial Damage" rule, commonly referred to as the FEMA 50% rule, is a regulation within the National Flood Insurance Program that applies to structures located in Special Flood Hazard Areas.

It stipulates that if a structure is damaged by any origin and the cost to repair it equals or exceeds 50% of its pre-damage market value, it must be brought into compliance with current building code standards. This often means elevating the structure, using flood-resistant materials, or even demolition and reconstruction.

This valuation only includes the structure and does not consider the value of the land.

For homeowners, it's important to explore this rule in depth so that you may better understand your rights if faced with a substantial damage determination.

Let’s look at the math:

John’s Narration: Remember, a structure that sustains damage that amounts to 50% or more of its pre-disaster value may be subject to this rule.

However, keep in mind that local government can modify this rule, changing the damage threshold. Therefore, it’s important to know the local rule adopted by your municipality.

John: Contact your County or region’s Floodplain Administrator to determine your local substantial damage threshold…

Jason: This is terrible. This is a horrible script. Forget it. Okay, I’ll tell you what. I had an intern write something up about this thing. I’m just going to read it, and we’ll call it a day.

Jason: Do you have a better idea? I didn’t think so.

Jason: A structure must be in a Special Hazard Zone to be subject to this rule.

John: Special Flood Hazard Area.

Jason: Fine. A structure must be in a Special Flood Hazard Area to be subject to this rule. which is an area defined as having a high risk of flooding, with at least a 1% annual chance of experiencing a flood event.

You can check whether your home is in one of these Areas by going online to FEMA’s Flood Map Service Center and entering your address.

If your address is in an A or V designation, you are in one of these Hazard areas. You can also reach out to your county for this information.

John: who exactly?

Jason: Google it or something. Don’t interrupt me again.

Following a disaster, your local government will begin the process of assessing damage to your area. This assessment is usually conducted by county officials in coordination with local emergency management partners. Depending on the scale of the disaster, this assessment can take some time. This is the time when a substantial damage assessment will occur.

If your home is determined by this assessment to be substantially damaged, you will receive a determination letter from your local government, likely from a building official or floodplain administrator. Be careful about scam letters coming from non-governmental organizations.

Put it away.

A substantial damage determination can dramatically affect your repair costs, so it is important to know that you can challenge these determinations.

To contest a substantial damage determination, you need to understand the nature of the decision, gather evidence to support your case, and appeal if you disagree. The method for appealing will be clearly stated in the letter.

If you intend to challenge a determination, keep these steps in mind:

• Understand Letter
• Stop Any Repairs
• Gather Documentation
• Secure Property Appraisal
• Secure Repair Estimates
• Seek Legal Assistance

Understanding the determination is critical to your appeal. Read the letter carefully to understand why the decision was made. Focus on challenging the initial determination if you believe the damage wasn't truly substantial. The letter will clearly provide the method and deadline for submitting and appeal.

You will want to pause any repairs of your property until the issue is resolved, as a substantial damage determination will likely dramatically affect your repair strategy.

Gather all relevant documentation that you may already have, such as repair estimates and photos of the damage to your home

If you feel that the value of your home was improperly calculated, you may request a reassessment through the county.

Ultimately, you may want to consider reaching out for legal assistance to guide you through this process.

Know that following a major disaster, there may be programs available in your area to help homeowners with substantial damage repairs. Additionally, if you have homeowner’s insurance, carefully review your full policy. Some policies may have provisions to pay for Increased Cost of Compliance if your property is substantially damaged.

Now, if you and your family keep these tips in mind, you’ll be better prepared to handle the aftermath of a disaster, and..

John: a lot less like Jason.

Jason: I hope that made you feel better. Get that out of your system? Well, I’m still your boss… So…

John: Let you write one script. Unbelievable.