Sept. 7, 2016



NEWS DESK: 225-382-1607

SBA: 916-764-9918


Fact Sheet

Substantial Damage – What Does It Mean for Louisiana Disaster Survivors?

Baton Rouge, La. – As disaster survivors in Louisiana continue rebuilding their lives and property, many could face the issue of “substantial damage,” as defined by the National Flood Insurance Program.

It’s common to think substantial damage merely describes a structure that has sustained a large amount of damage by a flood or other disaster.

In reality, substantial damage is a specific term. It applies to a damaged structure in a Special Flood Hazard Area – or floodplain – for which the total cost of repairs is 50 percent or more of the structure’s market value before the disaster occurred, regardless of the cause of damage.

For example, if a structure’s market value before the damage was $200,000 and repairs are estimated to cost $120,000, that structure is “substantially damaged.” Land value is excluded from the determination.

It’s important to know the percentage of structural damage because that information helps property owners decide whether to repair or replace a damaged dwelling, and whether additional work will be needed to comply with local codes and ordinances, such as elevating a house in a floodplain.

The decision about a structure being substantially damaged is made at a local government level, generally by a building official or floodplain manager.

For communities that participate in the National Flood Insurance Program, substantial damage determinations generally are required by local floodplain management ordinances. These ordinances must be in place for residents of a community to purchase flood insurance.

To calculate substantial damage, the local official may make a visual inspection of a house, taking notes of the impacts to the structure itself and, when possible, to the interior. These notes, coupled with other information such as property valuations and estimated costs to repair, are

used to calculate the percentage of flood damage to the structure. However some officials may not make that visual inspection but will rely on contractor estimates or NFIP claims information or simply make an edict that any flooding over “x” feet is substantially damaged. Whatever the process, the community must be consistent in its method.

Once a determination on the percentage of damage is made, local officials then share that information with the property owners.

If a building in a floodplain is determined by the local official to be substantially damaged, it must be brought into compliance with local floodplain management regulations:

  • Owners who decide to rebuild may need to elevate their structures, or change them in some other way to comply with those local floodplain regulations and avoid future flood losses.
  • Owners of non-residential structures may need to flood proof their buildings.

For more information about how or why a substantial damage determination was made, property owners should contact their local building official.

ALL property owners should check with local building officials to determine if permits for repair are required BEFORE beginning the work. Depending on local codes and ordinances, there can be serious consequences for not complying with the permitting process.

The requirements mentioned in this fact sheet are the minimum standards of the National Flood Insurance Program. Once again check with your local building department as your community may have adopted some higher standards that you may have to comply with when rebuilding.

Property owners who have a flood insurance policy and a substantially damaged building in a Special Flood Hazard Area may be able to use additional funds from their flood insurance policy (up to $30,000) to help defray the costs of elevating, relocating or demolishing a structure.

For more information on this provision – also known as Increased Cost of Compliance – contact your insurance agent.

For more information on general flood insurance questions, contact your local floodplain administrator, the National Flood Insurance Program (800-427-4661) or your local insurance agent. If you use TTY, you can call the National Flood Insurance Program at 800-427-5593. You can also email to request information in a language other than English. Information also is available at and


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