RISMEDIA, March 26, 2007-(MCT)-Gov. Mark Sanford wants to blunt the impact of a coastal property insurance crisis by offering a slew of tax credits and tax exemptions for homeowners willing to spend money to protect and self-insure their homes.
He could not say, however, how big those tax breaks would be, nor how the state would pay for all those tax breaks.
Wary of storms in the coming years on the scale of Hurricane Katrina, insurers have sought to limit their coastal exposure by dropping more than 20,000 coastal policies since August. Many property owners have seen their insurance premiums increase more than 100%.
Sanford proposed Thursday offering tax breaks to homeowners who buy building supplies to storm-proof their homes and requiring insurers to give premium discounts to homeowners who have sought to reduce damage.
Insurers also would have to give at least 60 days' notice before canceling an insurance policy.
The proposal "asks the consumer to take a little bit more responsibility," said Rep. Harry Cato, R-Greenville, who said he will introduce a bill this month outlining the proposal.
Cato, chairman of the influential House Labor, Commerce and Industry Committee, said it also would encourage companies to insure more properties on the coast.
Coastal lawmakers have called for more drastic action in other bills filed this year.
Many propose expanding the territory covered by a state-backed insurance pool on the coast, known as the wind pool, which offers more affordable insurance to homeowners who have trouble getting coverage.
Newly installed state insurance director Scott Richardson, who gave up his Senate seat representing Hilton Head Island to go to work for Sanford, has resisted those calls.
Instead, he champions changes he says would encourage more insurance companies to offer coverage in the state.
On Tuesday, Richardson expanded the area covered by the wind pool by a few miles around Myrtle Beach and to include some islands outside Charleston. Some lawmakers have called for all parts of all coastal counties to be included.
Sen. Ray Cleary, R-Georgetown, said he's willing to try a small expansion of the wind pool now, but would like to enlarge it later if it proves ineffective.
He also supported the tax incentives available for storm-proofing homes, as a bill he proposed in the Senate asks that the state provide free home inspections and match up to $5,000 for home improvements.
Cato's legislation would include provisions for poor and rich homeowners:
–Low-income property owners who pay more than 5% of their income for insurance premiums would be entitled to a tax credit.
–Property owners who want to devote as much as $250,000 to a disaster savings account — essentially insuring themselves instead of paying for a policy — would not be taxed.
–Tax-free savings accounts are also available for homeowners deciding to pay high deductibles, perhaps in the realm of $25,000.
Cato said the specific amounts of tax credits to be proposed were being debated.
Some of the proposals, such as the self-insuring savings accounts, would be embraced by a "handful" of wealthier people, Richardson said.
Others, such as tax breaks for those who buy building materials and strengthen their homes, could be more widely embraced.
That means the state won't collect taxes it previously had.
Sanford spokesman Joel Sawyer said that upon introduction of the bill, the state's Board of Economic Advisers would estimate how much money the state would lose through the proposed tax breaks.
A Windy Proposal
Gov. Mark Sanford has proposed incentives for coastal homeowners and insurance companies, including:
– Tax deductions for catastrophe savings accounts, up to $250,000
– Tax credits for lower-income property owners who pay more than 5% of their incomes toward insurance premiums
– Tax-free savings accounts for homeowners who choose to carry large deductibles
– Tax credits for property owners who buy building supplies to make their homes more storm resistant.
– Tax credits for insurance companies that write full coverage for property owners along the coast.
– Premium discounts to homeowners who have made their structures more storm resistant
Copyright © 2007, The State, Columbia, S.C.
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