How Outdated Building Codes Increase Climate Risk for Homeowners

A new report, however, shows building codes are failing to keep up with climate change, putting lives and homes at risk.

According to FEMA’s “Building Codes Save” report, outdated building codes are increasing risk – and increasing damages – for homeowners across the United States.

In fact, the report found that universal enforcement of modern building codes could save more than $600 billion in disaster losses by 2060.

Making things worse, some states have building codes that lag behind, while other states have no mandatory building codes whatsoever. When these states get hit by natural disasters, they’re more likely to experience severe damage.

What does this mean for homeowners, insurers, and policyholders? Let’s dive in.

States with Stricter Building Codes Have Less Disaster Damage

The Federal Emergency Management Agency (FEMA) recently published its “Building Codes Save” report.

That report showed how building codes save lives and money – and how universal enforcement of effective building codes nationwide could create even greater savings moving forward.

The report also highlighted state-by-state differences.

Key findings from the report include:

• FEMA estimates that universal enforcement of modern building codes could prevent more than $600 billion in disaster losses by 2060.
• States with strict building codes have already saved $1 to $3 billion.
• Building codes save lives and money by preparing states for disasters. They reduce the loss of life – and financial losses – during and following a disaster.
• The report praised Virginia and Florida for having some of the best building codes in the nation. FEMA estimates Florida’s building codes, in fact, helped to avert $1 to $3 billion in damages during Hurricane Ian.
• Other states, however, have lackluster building codes, increasing the risk of disaster damage. While Virginia and Florida have lower-than-average damages from disasters, other states have higher-than-average damages.
• At least two states, including Delaware and Alabama, have no mandatory statewide building code systems.

Billion-Dollar Disasters Are Becoming More Common

One key point of the report is that building code enforcement is a worthwhile investment – not an unnecessary regulatory hurdle – in a world where billion-dollar disasters are becoming more common.

Here’s how Jeff Dunsavage of the Insurance Information Institute’s Triple-I blog summarized the situation, citing an article for PropertyCasualty360 by Nationwide President and CEO Mark Berven:

…as the annual average of billion-dollar disasters in the US trends upward, improving building codes must take precedence for policymakers at every level of government.

According to the National Centers for Environmental Information (part of the National Oceanic and Atmospheric Administration, or NOAA), there were 27 billion-dollar weather and climate disaster events in 2024 alone, including 17 severe storms and 5 tropical cyclones. That’s higher than the average over the last five years (23.0 events per year, on average).

Why Don’t We Adopt Better Building Codes?

If better building codes save lives and reduce damage, then why don’t we adopt the best possible building codes in all jurisdictions?

Adopting building codes isn’t as simple as waving a magic wand. It adds costs and regulatory hurdles. It can reduce housing affordability. It can even involve relocating communities from vulnerable areas entirely.

Some of the reasons we don’t adopt better building codes include:

1. Cost of Upgrading & Retrofitting: Building codes save lives, but they can also increase costs for home builders. It costs money to build new buildings to new building codes – or upgrade existing buildings to meet modern building codes.
2. Perceived Expense of Enforcement: As Dunsavage explains, there’s also the “perceived expenses of enforcement.” Building codes only matter if someone enforces them.
3. Impact on Housing Affordability: Building codes can make housing more expensive, which is a problem when many states are dealing with a housing affordability crisis.
4. Relocating Vulnerable Communities to Safer Areas: Sometimes, modern building codes condemn entire at-risk communities – say, those in low-lying areas, high-risk fire areas, or fault zones. Uprooting these communities is controversial and costly.

Despite these issues, many experts suggest that building code investment is worth it: with billion-dollar disasters becoming more common, states with strong building codes could come out ahead.

How Building Codes Help with Climate Change

Can building codes really help reduce damage and save lives from billion-dollar disasters? How do building codes help?

Berven and Dunsavage refer to the Insurance Institute for Business & Home Safety (IBHS), which developed a set of affordable building codes designed to suit locations across the United States.

Called the FORTIFIED method, these building codes aim to make homes durable against extreme weather without excess costs. Some contractors and roofers are now Official FORTIFIED Building Professionals because they comply with the guidelines to build stronger homes.

Some of the ways in which the FORTIFIED method’s building codes help with climate change include:

• Anchoring roofs to wall framing using stronger, ring-shank nails
• Adding impact-resistant windows and pressure-rated doors
• Sealing the seams of your roof deck to prevent water intrusion
• Other changes to construction materials and techniques based on decades of scientific research by IBHS
• Meeting three levels of certification (Bronze, Silver, or Gold) when building or retrofitting a home
• Conducting third-party evaluations to ensure homes meet standards and guidelines

The FORTIFIED method is a set of voluntary guidelines – not a legal code. However, some organizations recommend referring to the method to retrofit homes – say, in disaster-prone areas with lax building codes.

The insurance industry-funded organization Strengthen Alabama Homes, for example, rewards homeowners for retrofitting their homes to FORTIFIED method standards. Alabama, as mentioned above, is one of several states with no statewide mandatory building code standards.

With billion-dollar disasters becoming more common, insurers – and homeowners – could benefit from stronger homes, especially in areas with weak building codes.

Stephanie Corona

Stephanie is a property insurance claim expert with over 20 years of experience working as an insurance adjuster, expert witness, appraiser and umpire. She is passionate about sharing her expertise, knowledge, tips and training to help both property owners and Public Adjusters in their pursuit of effectively managing claims and recovering the claim settlement they deserve after a loss.