Pennsylvania Task Force Urges Tax Breaks for Flood Damage, Mitigation and Insurance

Pennsylvania lawmakers should consider granting homeowners tax breaks for water damage expenses, mitigation and repair costs, and flood insurance premiums, according to a new state report.

Those are several of the recommendations by a task force that studied ways to better protect Pennsylvanians from uninsured flood losses and encourage more property owners to purchase flood insurance. There are 3.1 million insured homes in Pennsylvania — but only about 50,000 are insured against flooding, according to the Federal Emergency Management Administration (FEMA), which administers the National Flood Insurance Program (NFIP).

In addition to tax incentives, the report also recommends creating a state post to assist communities in qualifying for lower NFIP rates; improving flood disclosure in real estate transactions; and requiring flood risk continuing education for real estate and insurance agents.

The task force was headed by Insurance Commissioner Michael Humphreys, who said implementing the recommendations may necessitate legislative action, funding, and additional resources.

The nine recommendations are as follows:

• Establish an Office of Community Rating System Assistance and expand grants to communities.
• Improve disclosures during home-buying process.
• Incorporate flood risk and insurance continuing education across professional roles.
• Enhance education/outreach on flood risk and insurance.
• Incentivize home mitigation through tax credits.
• Enhance coverage for water damage by educating homeowners on endorsements and products.
• Incorporate flood resiliency into building codes.
• Propose a Pennsylvania Flood Insurance Relief Act to allow insurance premium tax deduction.
• Further study innovative insurance solutions including group insurance.

The state has 26 private insurers currently offering some form of flood coverage. The task force recommends that the insurance department investigate new insurance options including the possibility of group flood insurance. It also suggested the state approve tax credits or deductions for costs incurred by homeowners who make repairs so their homes are more flood-resistant or who take other mitigation measures, and allow homeowners to deduct flood insurance premiums from their state income taxes.