Modern Building Codes Could Prevent $1.6 Billion in Natural Disaster Damages Annually

Adhering to modern building codes could prevent $1.6 billion in annual losses

In total, Americans could prevent $1.6 billion in annual losses from floods, hurricane winds and earthquakes by adopting modern building codes in structures built in 2000 or later. That’s around $129 per analyzed building across the U.S. These findings come as FEMA reports that 65% of U.S. counties, cities and towns haven’t adopted modern building codes.

Though all structures would benefit from adhering to modern building codes, updating homes would prevent the most losses. Around $1.1 billion of the potential annual losses would affect one- and two-family homes, comprising 68% of all potential losses. That compares to:

It goes without saying that $1.6 billion is a hefty amount to lose — particularly on an annual basis. But it’s also important to note that the expected losses may only get more expensive.

FEMA uses historical data in its expected loss calculations. Namely, the agency looks at the annual frequency of disasters and the historic loss ratio (how much damage a particular natural disaster has caused). However, the number and cost of weather and climate disasters are increasing in the U.S. — this is due to a combination of factors, including an increasing number of buildings that are at risk and the fact that climate change is increasing the frequency and intensity of some types of extreme weather events.

FEMA’s Expected Annual Loss calculations also include analyzing the number of buildings exposed to a natural disaster. However, its risk models have only just begun to account for climate change. In fact, another ValuePenguin study on flood risk found that FEMA underestimated the number of properties at risk for flooding compared to other, more comprehensive flood models.

Majority of potential losses come from wind damage

We analyzed three different damage types: hurricane wind, flood and earthquake damage. Of the $1.6 billion in total potential losses, around $1.1 billion comes from potential wind damages — the most of any damage type examined. This comes as more than 9.2 million properties are at risk for potential hurricane wind damages.

Average annual losses avoided by damage type

Meanwhile, meeting flood damage building codes could prevent $483.6 million in potential losses for 786,473 properties, including properties at risk for coastal and river floods. Meeting earthquake building codes, on the other hand, could prevent $59.9 million in potential losses for more than 2.4 million properties at risk of earthquakes.

States that could prevent the most losses

While FEMA analyzed 18.2 million buildings constructed in 2000 or later across the U.S, only buildings with sufficient data were included in its model. In total, 12.4 million buildings were included in the three disaster models. Because the number of buildings included in the model varied by state, we also looked at the potential losses avoided per analyzed building.

Overall, Wisconsin could prevent the most losses on a per-building basis. By adopting modern building codes, properties in Wisconsin could prevent $403,486 in potential disaster-related losses per year — that’s $2,416 per building. However, the potential savings may be much higher. Although FEMA includes just 167 Wisconsin buildings in its model, Wisconsin has 42,023 buildings constructed in 2000 or later.

Notably, FEMA classifies two Wisconsin counties as high-hazard, high-growth areas, meaning areas that have a large number of post-2000 buildings exposed to significant hazards. In those high-hazard, high-growth counties in Wisconsin, Dane has over 9,000 post-2000 buildings, while Kenosha has over 8,600.

Wisconsin’s potential losses consist entirely of potential flood damages. In total, 368,670 properties in Wisconsin have a chance of being severely affected by flooding over the next 30 years, according to the First Street Foundation’s Risk Factor, largely from heavy rains. This represents 3% of all properties in Wisconsin.

States that could prevent the most annual losses per building by adopting modern codes

Indiana ranks second, with more than $16.3 million in potential losses avoided each year — $1,704 per building. Meanwhile, Arizona — ranking third — could avoid over $17.5 million in potential yearly losses. That comes out to $1,543 per building.

Both states’ potential losses consist entirely of flood damages. Indiana’s flood risk may seem apparent — the Midwestern state has experienced several destructive floods in the past, with many occurring because the state sits on the Ohio Basin, which puts the surrounding communities at risk of river flooding. But although Arizona likely isn’t a state that comes to mind when one thinks of flooding, its flood risks stem from a staple feature of desert climates: monsoon season. During Arizona’s monsoon season, which runs from June 15 to Sept. 30, storms and flooding can hit quickly, causing conditions to change rapidly.

By disaster type, these states could prevent the most losses

Properties in the District of Columbia could prevent nearly $2,500 in flooding losses per building — that’s the most of any state affected by flooding. Its location (the nation’s capital is positioned between the Potomac and Anacostia rivers) and flatter elevation make it highly susceptible to flooding.

Of the 23 states included in wind damage models, Florida could prevent the most wind losses at $514 per building — this is due primarily to its risk of hurricanes. (Another ValuePenguin study on severe weather damages found that hurricanes were the leading cause of weather-related damages in the state, causing $4.8 billion in property damages over the past five years.)

States that could prevent the most annual losses per building by adopting modern hurricane wind codes

Meanwhile, of the six states included in earthquake damage models, Hawaii could prevent the most seismic losses at $56 per building. Volcanoes are largely to blame for Hawaii’s earthquake activity, and of the thousands of earthquakes Hawaii experiences yearly, the majority occur on and around the Island of Hawaii. The southern districts of the island, where three of the state’s most active volcanoes are located, are the most impacted by earthquakes.

Following Hawaii, the states that could prevent the most seismic damage include:

States that could prevent the least losses

Not all states would benefit greatly from updating their buildings to modern codes. Of all states, New Hampshire and Vermont are the two states where potential avoided losses are below $1 per building. New Hampshire would prevent the least overall, at 12 cents per building, with 78 cents per building in Vermont,.

States that could prevent the least annual losses by adopting modern building codes

In the case of New Hampshire, this is largely because the state has already adopted building codes that meet FEMA’s standards. New Hampshire is one of two New England states that have fully adopted the 2015 International Building Code and 2015 International Residential Code. But although Vermont has comparatively low resistance to hazards and hasn’t adopted the latest building codes, the risk of experiencing a natural disaster is low. FEMA classifies the average risk throughout Vermont at 5.7. Meanwhile, the national average risk across the U.S. is at 10.6.

Expert tips to prevent natural disaster damages

Amid a summer season of many weather-related property damages, the White House announced plans in early August to make more than $1 billion available to communities to help make them more resilient against extreme weather events. While that’s good news, you don’t have to wait until federal funds start rolling out. Homeowners can — and often should — take action to increase their own property’s resiliency now.

For those homeowners, Sangameshwar offers the following advice: