UNDERSTANDING SUBSTANTIAL IMPROVEMENT AND SUBSTANTIAL DAMAGE
[https://www.fema.gov/fact-sheet/understanding-substantial-improvement-and-substantial-damage]


Release Date: 
Dec 30, 2024 

Release Number: 
FS-39 

When buildings undergo repair or improvement, it’s an opportunity to
reduce future flood damage. Communities participating in the National
Flood Insurance Program adopt and enforce a floodplain management
ordinance that applies to development in a Special Flood Hazard
Area. 

Your local floodplain management ordinance contains minimum NFIP
requirements that are not only for new structures, but also for
existing structures with proposed “substantial improvements” or
repair of “substantial damage.” 

Local officials in communities that participate in the NFIP must
determine whether proposed work qualifies as a substantial improvement
or repair of substantial damage (referred to as an “SI/SD
determination”). If work on buildings constitutes SI/SD, then
STRUCTURES MUST BE BROUGHT INTO COMPLIANCE WITH YOUR LOCAL FLOODPLAIN
MANAGEMENT ORDINANCE. 

THE NFIP DEFINES SI/SD AS FOLLOWS: 

	* SUBSTANTIAL IMPROVEMENT (SI) 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 (or smaller percentage if established by the community)
before the “start of construction” of the improvement. 
	* SUBSTANTIAL DAMAGE (SD) means damage of any kind 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. 

WHO MAKES THE DETERMINATION?

Local jurisdictions are responsible for substantial damage
determinations based on their specific floodplain ordinances and will
notify property owners of those decisions. FEMA does not make
substantial damage determinations or notify property owners; however,
FEMA may provide damage data that helps local jurisdictions make these
determinations.

WHAT SUBSTANTIAL IMPROVEMENT/SUBSTANTIAL DAMAGE MEANS FOR HOMEOWNERS

If a building in an SFHA is determined by local officials to be SI/SD,
it must be brought into compliance with current local floodplain
management ordinance. This may involve:

	* Elevating or modifying a structure to meet floodplain standards.
	* Relocating or demolishing a structure.
	* Floodproofing non-residential or historic buildings.

Ask local floodplain administrators and building officials about
REQUIRED PERMITS before starting repairs.

INCREASED COST OF COMPLIANCE COVERAGE

If you have a building in a Special Flood Hazard Area that has NFIP
flood insurance coverage and is substantially damaged due to flood
waters, you may qualify for Increased Cost of Compliance
(ICC) coverage. ICC provides UP TO $30,000 to help
with the cost of elevating, relocating, demolishing, or
floodproofing a non-residential structure. For more information,
contact your insurance agent.

For additional resources and requirements, consult with local
floodplain administrators, building officials or visit: floodsmart.gov
[https://www.floodsmart.gov/].