A disastrous bill in Congress
As far too many Californians have learned this year, rebuilding after a fire is emotionally and financially harrowing. Unfortunately, it may be even harder next year.
State Insurance Commissioner Dave Jones says this year’s devastating wildfires could reshape the market for fire insurance, leaving Californians with fewer options to protect their homes in the future.
Meanwhile, under the Republican tax plan that’s going through a reconciliation process in Congress, both the House and Senate versions contain strict limits on taxpayers’ ability to write off losses from wildfires and other future disasters.
The disaster write-off was an obscure deduction to which Californians are paying far more attention this year. It allows people to claim tax write-offs for uninsured losses after all kinds of disasters. It’s important because, as disaster victims quickly learn, insurance coverage often doesn’t extend to the full cost of rebuilding a home and a life.
The House’s version of the bill would wipe out the entire deduction for uninsured losses after all kinds of disasters.
The Senate’s version allows people to claim the deduction only if the president declares a federal disaster.
That’s a serious restriction. Most incidents aren’t large enough to be declared federal disasters. According to the National Interagency Fire Center, there have been about 58,000 wildfires this year, and only a small number of those were declared federal disasters.
“It’s a complete disaster on top of the disasters that have already befallen fire survivors,” Jones said.
Adding to the concerns is the fact that California’s season of catastrophe may result in fewer insurance options for some California homeowners.
Certain areas burned this year that had never burned before. These nasty surprises, combined with increasingly sophisticated insurance modeling, could leave some homeowners out in the cold.
Jones said he’s carefully monitoring for spikes in the number of homeowners requesting coverage from the state’s FAIR Plan — a last-resort insurance policy.
One thing is for certain: As climate change increases the frequency of catastrophic events, Californians will need more flexibility to recover from disasters. The GOP tax bill is a step in the wrong direction.
According to the National Interagency Fire Center, there have been about 58,000 wildfires this year, and only a small number of those were declared federal disasters.