Homeowners’ Insurance Should Cover Entire Hurricane Risk (Rep. Gene Taylor)

Speaker Pelosi (D-Calif.), Financial Services Committee Chairman Frank (D-Mass.) and Housing Subcommittee Chairwoman Waters (D-Calif.) have agreed to act on H.R. 920, my legislation to create a new option in the National Flood Insurance Program to offer one policy that covers both wind and flood risk. Ms. Waters’ subcommittee will hold a hearing in July. The bill could then be combined with H.R. 1682, the Flood Insurance Reform and Modernization Act, for committee markup and House consideration.

The Multiple Peril Insurance Act would allow homeowners to buy insurance and know that their hurricane damage will be covered. The current system allows insurance company to adjust both wind and flood claims. After Katrina, some companies instructed their adjusters to bill only the federal flood insurance policy for damage that was caused by the combination of wind and water. As a result, flood insurance paid for some damage caused by winds. Homeowners had to hire lawyers, engineers, and public adjusters to seek proper adjustment of combined wind and water losses. I have posted insurance documents, altered damage assessments and other evidence of fraudulent claims adjustment practices on my website.

The bill also addresses the insurance crisis facing many of the 53 percent of Americans who live in a coastal community. Private insurers are withdrawing from all Gulf Coast, Atlantic Coast, and Pacific Coast states, forcing state-sponsored insurance plans to take on more and more disaster risk. This is a national problem that calls for a Congressional response. I have posted links to articles about the coastal insurance crisis on my website blog.

H.R. 920 requires the premiums for the new coverage to be set at actuarially sound rates, without subsidies, so that the program would collect enough in premiums to pay for itself. Insurance companies would still sell homeowners’ policies covering fire, theft, and liability, they would earn commissions for selling the multiple peril policies, and they could offer excess coverage above the policy limits of the federal program.