Measures Would Provide Immediate Relief and Help Families Stay in their Homes
Washington, D.C., November 9, 2007 — Recognizing that immediate assistance is needed for those living near coastal areas who are grappling with skyrocketing property insurance premiums, Senator Chris Dodd, D-Conn., Chairman of the Senate Banking, Housing and Urban Affairs Committee, today introduced two bills to help American homeowners and businesses lessen the financial strain experienced as a result of natural disasters.
“Each year hurricanes and other natural disasters devastate and destroy homes, communities and lives. We shouldn’t worsen the problem by allowing the costs of escalating insurance expenses to ruin homeowners and business owners financially,” said Dodd. “We need to explore any and all long-term solutions to helping homeowners and business owners. But these families need immediate assistance to help reduce their costs. These two bills can help keep homeowners in their homes, before and after, a storm hits.”
The first measure, the Homeowners Insurance Assistance Act of 2007, would provide tax credits to homeowners who face skyrocketing insurance premiums in coastal areas. The tax credits would be used to offset the costs of homeowners’ insurance premiums and targeted to those most in need. The tax credits would be available for one year to provide temporary assistance to affected homeowners in their primary residence. These tax credits will provide homeowners with needed financial relief in the short-term.
The second piece of legislation, the Property Mitigation Assistance Act of 2007, would provide cost-effective resources to homeowners and business owners to help protect their properties and reduce the future financial risks they face from natural disasters. Under the legislation, federal funds would be used by states to help property owners elevate endangered portions of homes, build safe rooms, and install other devices such as storm shutters to protect vulnerable properties.
The two bills represent Dodd’s on-going commitment to ensuring that homeowners and business owners are able to afford adequate insurance coverage. Last month, under Dodd’s leadership, the Banking Committee approved a bill to strengthen the national flood insurance program. The measure would provide assistance to homeowners by effectively doing away with $20 billion in debt that ultimately could increase insurance premiums. Senator Dodd chaired a hearing in April to examine how our nation can address the availability and affordability of insurance in our nation’s coastal regions. Senator Dodd has said he will carefully examine any and all legislative efforts that address both immediate and long-term solutions to the problem.
A summary of the two Dodd bills is below.
Property Mitigation Assistance Act of 2007
* Establishes a Property Mitigation Loan Program at FEMA, funded at $200 million annually, to assist homeowners and business owners in mitigating their risks of loss from natural disasters such as flooding, hurricanes, tornadoes, and earthquakes.
* Any state that has a mitigation plan (already required by FEMA), that has established a process for accepting and reviewing applications and that can establish a revolving loan fund will receive funding. No state will receive less than $500,000 annually, and States will receive additional funding based on level of risk, number of properties at risk, and losses from natural disasters.
* With federal funds, states will establish revolving loan funds that will be used to make loans, or grants in the case of very-low income households, to property owners to undertake mitigation activities such as elevation, storm shutters, hurricane clips, and other activities that are designed to protect the property from natural disasters.
* Priority will be given to applicants based on location, level of risk, eligibility of activity, and reasonableness of cost.
* Revolving loan funds will allow federal dollars to be used over and over again—as loans are paid back each month, additional funds will be available for additional grants and loans.
Homeowners Insurance Assistance Act of 2007
* This legislation provides a tax credit to help homeowners who are struggling to pay insurance bills that have skyrocketed as a result of Hurricanes Katrina, Rita, and Wilma as well as the 2004 hurricanes.
* This will be a one-time tax credit to provide temporary assistance to affected homeowners for their primary residence.
* Eligible homeowners live in the areas directly affected by those hurricanes, as well as in other areas of coastal states determined by the Department of the Treasury, in consultation with the National Association of Insurance Commissioners, to be experiencing insurance problems.
* To qualify for the tax credit, a homeowner must have experienced an increase in insurance premiums greater than the national average increase in premiums.
* Eligible homeowners can claim a tax credit for up to 50% of the amount of their premium increase that is above the national average increase, not to exceed $250.
* Homeowners with incomes at or below the median income for their state may take the full 50% credit. The credit phases out at 150% of the state median income.
* The property must be the homeowner’s primary residence. The homeowner must have lived in the home prior to the Presidential disaster declaration (or for other areas, prior to September 1, 2005), and must not have made significant improvements that contributed to the premium increase.