Every standard flood policy written through the National Flood Insurance Program (NFIP) includes a coverage many Tennessee owners have never heard of: Increased Cost of Compliance (ICC). FloodSmart, the NFIP's consumer site, says a policyholder “may receive up to $30,000” to make changes if a home or business was badly or repeatedly damaged by a flood.
ICC exists for the moment after a bad flood when the question is no longer “what will it cost to fix the drywall?” but “will the building department let us rebuild the way it was?” In a high-risk flood zone, a heavily damaged building may have to be raised, moved, or torn down to meet local floodplain rules. ICC is designed to help with that cost.
| ICC item | What FloodSmart says |
|---|---|
| Maximum ICC amount | Up to $30,000 for qualifying NFIP policyholders |
| Substantial damage test | Restoration cost equals or exceeds 50% of pre-damage market value |
| Repetitive damage test | Flood damage on at least two occasions in 10 years, repairs averaging at least 25% of market value each time |
| Possible advance | Up to $15,000 after a signed contract, community permit, and signed ICC Proof of Loss |
| Eligible activities | Elevate, relocate, demolish, or floodproof (floodproofing only if the building is not a home) |
Source: FloodSmart, Increased Cost of Compliance coverage.
Who can qualify
According to FloodSmart, ICC applies when you are an NFIP policyholder, the building is in a Special Flood Hazard Area (SFHA), and your community building department determines the building is substantially or repetitively damaged by flooding as the NFIP defines those terms. The community's determination is the trigger. Without it, there is no ICC claim.
The two damage tests are specific. A building is substantially damaged when restoring it to its pre-flood condition would cost 50% or more of its market value before the damage. If the damage is under 50%, FloodSmart says ICC coverage is not available. A building is repetitively damaged when it has flooded at least twice in a 10-year period and the repairs averaged at least 25% of its market value each time.
ICC is a separate claim with a shared ceiling
FloodSmart says the ICC claim is separate from the building or contents claim. If you qualify, you file both. The catch is the ceiling: the combined payments for flood damage and ICC cannot exceed the maximum building coverage limit available through the NFIP. A building claim that already reaches that limit leaves less room for ICC.
What the money can be used for
ICC can help pay to elevate a building above the flood level your community requires, relocate it to a new site, demolish it, or floodproof it if it is not a home. Your local floodplain management official is the person who explains which option meets local rules.
How the payment process works
FloodSmart describes a sequence: get the community's damage determination, meet the local floodplain ordinances, contact your insurance agent, and get contractor estimates. You may be able to receive up to $15,000 in advance after giving your claims representative a signed contract for the work, a community permit, and a signed ICC Proof of Loss. After the work passes local inspection, you send the completion letter to the insurer for final payment. If the work is not completed, FloodSmart says you must return any partial payment.
Why this matters in East Tennessee
Creeks and rivers that run through mountain towns and older neighborhoods can turn a single storm into major damage. New flood maps can also change which buildings sit in a Special Flood Hazard Area; see New FEMA Flood Maps Hit Sevier County Nov. 13, 2026. For the basics of NFIP coverage, start with Tennessee Flood Insurance: Everything Homeowners Need to Know in 2026. Remember that new NFIP policies usually do not start the day you buy them: New Tennessee flood insurance usually waits 30 days to start, and federal rules list only three exceptions. Federal disaster aid is not a substitute for flood insurance: FEMA caps disaster housing aid at $44,800 per household, and that is not the same as flood insurance. Cabin and home owners in the Smokies can also read Flood Insurance in Pigeon Forge, TN: What Every Homeowner and Cabin Owner Needs to Know.
Related reading from All Seasons
- New FEMA Flood Maps Hit Sevier County Nov. 13, 2026
- Tennessee Flood Insurance: Everything Homeowners Need to Know in 2026
- New Tennessee flood insurance usually waits 30 days to start, and federal rules list only three exceptions.
- FEMA caps disaster housing aid at $44,800 per household, and that is not the same as flood insurance.
- Flood Insurance in Pigeon Forge, TN: What Every Homeowner and Cabin Owner Needs to Know
Free policy review
All Seasons Insurance Group offers a free personal policy review. Call 865-263-1400 or visit asigtn.com/get-a-quote/. This article is informational only and does not promise coverage or eligibility; your policy forms control. Seasons change. So should your coverage.
What is Increased Cost of Compliance coverage?
ICC is coverage included in a standard NFIP flood policy. FloodSmart says it can help pay to elevate, relocate, demolish, or floodproof (if not a home) a building that must meet community rebuilding rules after a flood.
How much ICC coverage is available?
FloodSmart says qualifying NFIP policyholders can receive up to $30,000 in ICC coverage.
Does ICC come on top of my building claim?
It is a separate claim, but FloodSmart says the combined flood damage and ICC payments cannot exceed the NFIP maximum building coverage limit.
What counts as substantial damage?
FloodSmart says it is damage where restoring the structure would equal or exceed 50% of its pre-damage market value. Under 50%, ICC is not available.
What counts as repetitive damage?
Flood damage on at least two occasions during a 10-year period, with repair costs averaging at least 25% of the building's market value each time.
Can I get ICC money before the work is done?
FloodSmart says you may be able to receive up to $15,000 in advance after submitting a signed contract, a community permit, and a signed ICC Proof of Loss.
Who decides whether my building qualifies?
Your community building department makes the substantial or repetitive damage determination, and the building must be in a Special Flood Hazard Area with an NFIP policy in force.
How can All Seasons help after reading this?
Call 865-263-1400 or visit asigtn.com/get-a-quote/ for a free personal policy review. Informational only; no coverage promises. Seasons change. So should your coverage.
