Nationwide, over 80% of paid flood insurance claims are for "Pre-Flood Insurance Rate Map" structures.
Some structures on Hilton Head Island were constructed in flood hazard zones prior to the regulation for elevating structures. Another number of structures were built to elevation requirements in effect at the time they were constructed, but do not meet the current requirements.
The purpose of the substantial improvement and substantial damage regulations is to ensure that lives and increased investment in flood hazard areas will be protected from flooding.
This is accomplished by bringing non-conforming, "Pre-FIRM" structures into compliance with current NFIP rules.
The 50% rule was established by FEMA as a compromise between:
Substantial improvement is any reconstruction, rehabilitation, addition, or other improvement of a structure, the cost of which equals or exceeds 50% of the market value of the structure before the "start of construction" of the improvement. This term includes structures which have incurred "substantial damage'", regardless of the actual repair work performed. Substantial damage is damage of any origin sustained by a structure whereby the cost of restoring the structure to its before damage condition would equal or exceed 50% of the market value of the structure before the damage occurred.
It is the responsibility of the community to review and validate the accuracy of improvement cost or repair to damages. The Community Development Department has created new application forms to assist them in their review of applications where the work being proposed may approach a high percentage(%) of the value of the structure as determined by figures available in the County Tax Assessor's records. A certified appraisal of the structure and its attachments including an adjustment for depreciation can also be used to establish structure value.
The new forms include a more detailed description of the work to be performed and an itemization of the value of demolition and value of materials, labor and profit. In addition, an owner and contractor affidavit form will be a part of the application submittal.
Substantially improved structures are considered new construction and must meet all minimum requirements of the National Flood Insurance Program - they must be brought into compliance with current elevation requirements. Non residential structures may be dry flood proofed one foot above the requirement in lieu of elevation.
Consider bringing the structure into compliance by raising it to current flood elevation requirements. If this is done, the home will be safer, the community will benefit from fewer losses and you can then exceed 50% of the value for your project.