Florida lawmakers are proposing to change the tax code to provide premium relief for homeowners

Florida lawmakers are proposing to change the tax code to provide premium relief for homeowners

Florida lawmakers are proposing to change the tax code to provide premium relief for homeowners

Florida Congressman Byron Donalds is working with his colleague Senator Rick Scott on a bill to provide Florida homeowners with a measure of relief from the Sunshine State's insurance crisis. The bill, known as “The Flood Insurance Relief Act,” would change the Internal Revenue Code of 1986 by giving homeowners a so-called “above the line” deduction for their insurance premiums.

An above-the-line deduction would allow homeowners to deduct the cost of their insurance premiums from their gross income instead of their take-home pay, a move that would lead to significant savings. In a press release explaining the motivation behind the bill, House Representative Donalds and Senator Scott claim it would “provide much-needed tax relief for the National Flood Insurance Program (NFIP) and private insurance policyholders throughout Southwest Florida, the Sunshine State, and the nation.”

It has the potential to become an important piece of legislation because Floridas The home insurance crisis is quickly spreading across borders and becoming a national issue. That said, the situation in Florida is particularly dire. Florida's insurance industry has been battered by a series of rapid-fire hurricanes and extreme weather events that hit the state as property values ​​soar due to a huge influx of new residents.

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These storms, which occurred in quick succession between 2018 and 2023, have cost insurers billions of dollars in claim payouts and damage-related lawsuits. It not only forced insurers to drastically increase premiums, but also disrupted the reinsurance market to such an extent that many insurers shrugged their shoulders and left the market completely. As it stands, Citizens Property Insurance, Florida's government-run insurance company, is the largest provider of home insurance in the world. Florida.

The idea of ​​a state insurer having to foot the bill after a major hurricane is problematic for obvious reasons when you consider the total value of private property in Florida and the fact that there is no state income tax. Another problem for Florida homeowners is that the state's remaining private insurers are increasingly demanding premiums, deductibles and coverage limits for policy renewals.

Florida residents already pay the highest average insurance premiums in the country, and many policy renewals have one thing in common: they cost more and cover less. This has become a particularly thorny issue for Florida's condominium market, a lucrative sector popular among the state's retirees. Many of them are finding themselves under pressure on both sides because the only thing rising faster than their individual homeowner's premium is the group policy for the entire community.

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Insurers also inspect condominium communities and require upgrades and repairs to be made before renewing policies. In many cases, these repairs are very expensive and result in onerous assessments that property owners on fixed incomes simply cannot afford. As a result, many condominium owners are putting their properties on the market, only to find that buyers are very hesitant about purchasing due to concerns about secondary expenses such as insurance premiums and HOA assessments.

It's also important to note that Florida is far from the only state facing an insurance crisis. Home insurers have been fleeing in California over the cost of covering floods, fires and other natural disasters. Like Florida, California's state insurer, which was intended as a last resort, is quickly becoming a first option for frustrated homeowners who can't find an affordable policy elsewhere.

States like Louisiana, West Virginia and South Dakota all report average premium increases of more than 200%. With that as background, the Flood Insurance Relief Act could be a big help to struggling homeowners across the country. Being able to write off insurance premiums against gross income wouldn't solve the problem entirely, but it would certainly soften the blow that many American homeowners take when their policies come up for renewal.

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This article Florida lawmakers are proposing to change the tax code to provide premium relief for homeowners originally appeared on Benzinga.com

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