Recent research by ValuePenguin suggests that property owners and construction companies could avoid more than $1 billion in natural disaster damages costs each year simply by following building codes. The insurance platform’s study, based on an analysis of data gathered by the Federal Emergency Management Agency, concludes that the adoption of building codes from, at earliest, 2015 could specifically prevent $1.6 billion in annual losses.
The study’s “Key Findings” section describes Value Penguin’s findings that upgrades to one- and two-family homes to adhere to modern building codes would avoid the majority of losses, about $1.1 billion each year. By contrast, upgrades to commercial buildings would prevent $279.1 million in annual losses; upgrades to residential buildings other than homes would prevent $162.4 million; and upgrades to industrial buildings and “other building types” would prevent a total of $76.1 billion in annual losses.
Updating buildings to comply with hurricane prevention codes would be the most important safety upgrade, according to the study, preventing about $1.1 billion in damages. Renovations to meet flood damage code would prevent $483.6 million in damages annually, while renovations to meet seismic code requirements would prevent $59.9 million in damages annually. The state that stands to save the most from upgrades to meet building codes is Wisconsin, per the study, where renovations “could prevent $2,416 in annual disaster-related losses per analyzed building.” Indiana and Arizona come in second and third, at $1,704/building and $1,543/building, while New Hampshire and Vermont come in last.
In a statement about the study, one of ValuePenguin’s home insurance experts said: “While one of the most cost-effective ways to safeguard properties against natural disasters is to adopt and follow hazard-resistant building codes, almost two-thirds of the country hasn’t adopted them… At the same time, natural disasters are becoming increasingly common and more destructive due to climate change.”
More information about the research suggesting upgrades to meet modern building code could prevent $1.6 billion in annual natural disaster damages is available via ValuePenguin.