Sen. Jim Inhofe (R-Okla.) and Rep. Dennis Ross (R-Fla.) have introduced The Disaster Savings Accounts (DSA) Act of 2014 in their respective chambers. The DSA Act would establish a new tax-preferred savings account that homeowners can use specifically for the purpose of natural disaster mitigation and recovery.
The legislation would give homeowners the opportunity to contribute up to $5,000 a year to a tax-deductible savings account, with unused funds rolling over each year. The savings can be used to pay for home fortifications such as a safe room, wind resistant windows and doors, or elevating structures; or for recovery expenses to help fill the gap between insurance deductibles and other recovery funds. In the case of accessing the Disaster Savings Account funds for recovery expenses, the event must be a state or federally declared disaster with uninsured losses totaling at least $3,000.
According to NOAA, there were seven "Billion-Dollar Event" weather disasters in 2013, including five tornado events.
Sen. Inhofe likens the savings account to those used to prepare for retirement or health care needs:
"Every year many Americans face unexpected financial tolls and personal losses from natural disasters, of which Oklahomans experienced some of the harshest last year when tornadoes devastated portions of our state."
"Whether it's a retirement or health savings account, Americans understand the importance of preparing and setting aside funds for the future and these accounts have long been incentivized with federal tax relief."
"The DSA Act is a common-sense solution to help mitigate the costly impacts of natural disasters by affording homeowners the opportunity to set aside $5,000 a year in a tax-preferred account for disaster prevention or revitalization. It empowers Americans to take their security into their own hands instead of waiting for an unknown period of time for government assistance or for a costly insurance premium to kick in. I'm proud to introduce the DSA Act with Congressman Ross to give those in disaster-prone areas better means to prepare for catastrophic weather or begin the road to rebuilding."
"Ultimately, this type of saving will reduce future federal costs to taxpayers since every dollar spent on mitigation can save up to four dollars in future disaster recovery spending, said Rep. Ross:
The DSA Act has been endorsed by Lowe's Home Improvement, The Home Depot, FLASH (Federal Alliance for Safe Homes), Reinsurance Association of America, National Association of Home Builders, SmarterSafer.org, and The Nature Conservancy.