Flood insurance.jpgIn January, Governor Chris Christie signed an Executive Order and proposed emergency regulations to guide the rebuilding process after Superstorm Sandy in flood prone areas of New Jersey.   Before the storm, the building code and flood-proofing regulations in the state were based on flood maps adopted by the New Jersey Department of Environmental Protection (“the Department”) in the 1970’s and 1980’s.  Unfortunately, these maps underestimated the 100-year flood elevations by anywhere from one to eight feet.  The Federal Emergency Management Agency (“FEMA”) is in the process of reevaluating its flood maps for New Jersey. One of the changes, which will have a widespread effect, is the adoption of FEMA’s 100-year flow rate maps, including advisory, proposed or effective mapping. Owners and their contractors rebuilding in New Jersey will need to consider FEMA’s most recent maps (the “New Maps”), regardless of whether the map at issue is considered to be final and approved.  All of these maps are available on FEMA’s website.

The Executive Order and the emergency regulations propose the following for construction in flood-prone areas:

  • A building is substantially damaged if the cost of restoring it to its original condition would equal or exceed 50% of the market value of the structure before the storm damage occurred.
  • An individual permit for reconstruction of a home that has suffered substantial damage due to the storm may not be issued by the Department unless the lowest floor of the home is constructed or modified such that it is set at least one foot above the elevation set by the New Maps.
  • The “lowest floor of a building” only includes a space which may be used for permanent or temporary occupation and does not include a crawl space, entryway and or garage if it is used for building access, parking or storage.
  • The Department may issue an individual permit for reconstruction of a commercial building that has suffered damage due to the storm that is not set at least one foot above the elevation set by the New Map map if an architect or engineer certifies that the building will be constructed in accordance with flood-proofing requirements.
  • The regulations also permit, for the first time, that commercial buildings be “wet flood-proofed.” Wet flood-proofing allows for flood waters to move freely in a building without damaging the structural integrity of the building.
  • When a property owner plans to rebuild, a permit need not be sought from the Department as long as the “footprint” of the building is not increased by more than 300 square feet, the lowest floor of the building is built at least one foot above the elevation set by the New Map, any basement or ground floor garage is not used for habitation, and the building is not moved closer to any large body of water or into a floodway. This will save the owner the cost of a permit fee.

According to the regulations, building owners who seek to comply will qualify for assistance from FEMA to help cover the cost of the work associated with complying with the regulations.  Since the new FEMA maps will likely place more properties in flood zones than before the storm, while other properties will be placed in more severe flood zones, flood insurance premiums will rise substantially for some New Jersey property owners.  But, FEMA anticipates that property owners who chose to comply when rebuilding could see their flood insurance premiums drop by more than 200%.

Have an opinion?

The regulations were adopted via an Executive Order, but will become permanent after an abbreviated comment period from the public.  A public hearing on these proposed regulations is scheduled for Thursday, March 7, 2013 at 5:30 pm at the City of Long Branch Municipal Building, Council Chambers, 344 Broadway 2nd Floor, Long Branch, New Jersey 07740.

Jonathan A. Cass is the Chair of the Insurance Coverage & Risk Management Group at Cohen Seglias Pallas Greenhall & Furman PC. He has extensive experience representing insureds and insurers in insurance coverage disputes.

Jennifer R. Budd is an Associate at Cohen Seglias Pallas Greenhall & Furman PC and a member of the Construction Group.