Fla. Sets Groundwork for Hurricane Savings Accounts

Florida’s Chief Financial Officer Tom Gallagher today applauded state lawmakers for approving a measure that lays the groundwork for Floridians to set up hurricane savings accounts and protect these accounts from creditors. Congress would now need to create the accounts under federal law and grant a tax-exempt designation.

“Hurricane savings accounts would give Floridians the opportunity to put money aside to prepare for the financial impact of a catastrophic storm,” said Gallagher, who initiated the idea with state lawmakers. “I applaud the Legislature, especially Sen. Carlton and Rep. Altman, for setting the wheels in motion for Floridians to take advantage of these accounts. The next step is to aggressively lobby Congress to act.”

Gallagher met with several members of Florida’s congressional delegation in March to promote legislation in Congress creating Hurricane Savings Accounts. Structured in the same manner as Health Savings Accounts and IRAs, a tax-free savings account could be opened to cover current and future hurricane-related expenses. The money deposited, as well as the interest earned, would be tax-deferred. Unused balances would roll over from year-to-year.

According to Gallagher, the ceiling on the accounts could be twice the amount of the individual’s deductible, and the money could only be withdrawn to cover qualified hurricane expenses tax-free. Qualified expenses would include: deductibles, uninsured losses such as docks, flood damage, and structural upgrades for future storms.

“As balances accumulate tax-free, consumers would also have the option to purchase higher deductible policies which would result in lower annual premiums,” Gallagher said.

The legislation (Senate Bill 660), sponsored by Senator Lisa Carlton and Representative Thad Altman, adds hurricane savings accounts to the types of assets protected from creditors. Under the legislation, the amount that may be protected from creditors is limited to twice the deductible of a person’s homeowners’ insurance.

The bill next goes to Gov. Jeb Bush for his signature.

Topics Catastrophe Natural Disasters Legislation Hurricane A.J. Gallagher