Lawmakers propose bill to reduce flood insurance cost

Florida lawmakers have introduced a bill to save customer money on flood insurance costs.

The "Flood Insurance Relief Act," introduced by Congressman Byron Daniels and Senator Rick Scott, would make flood insurance premiums tax deductible.

For people who itemize deductions, this could reduce taxable income and would create savings, which would depend on the amount of the flood insurance premium and the effective tax rate of that individual.

The average annual cost of flood insurance across the state of Florida is $853, though the cost of flood insurance can vary from a few hundred dollars to several thousand dollars, depending on the location of the property.

This legislation, if approved, would not have any impact on the cost of property insurance because it is solely aimed at reducing the cost of flood insurance.

While flood insurance is not generally required in Florida, it is considered desirable for most people in the state, because property insurance does not cover the cost of damage from floods and many parts of the state are flood-prone from both hurricanes and local flooding from rivers and lakes.

According to legislation passed by the Florida Legislature in 2022, flood insurance will be required on all property covered by Citizens Insurance by 2027.

This legislation is being rolled out with coverage required for the higher priced properties and those at greater risk of flooding first and then continuing to eventually be required for all Citizens policies.

Flood insurance is written by some private insurance companies or the National Flood Insurance Program (NFIP).

Senator Scott has wanted to reform NFIP, including pushing for legislation that would build a more robust private market, which Scott has said would help lower the cost of flood insurance.

The tax cuts proposed by Scott would cover both policies written under the NFIP as well as policies written by private insurers.

Although this legislation does not address the property insurance crisis in the state, which urgently needs to be addressed, it does have the potential to save a few dollars for those who buy flood insurance. In the face of the soaring cost of insurance in the state, every little savings is welcome.