RICHMOND HILL, Ga. (WTOC) – A new state law that took effect at the start of the year creates a way for Georgians to build tax-advantaged savings specifically for disaster repairs, a measure supporters say will help fill gaps left by insurance.
Mary Mann still remembers the day Tropical Storm Debby damaged the Richmond Hill house she had bought only months earlier. Floodwaters seeped into the walls, and mold followed — leaving her and her husband, both veterans, sick and without the flood coverage that might have helped.
“All I know is I want my house back. It’s all I want,” Mann said. “And we literally lost it within months,” she added, describing how quickly the damage changed their life.
Her neighbor, Barry Doepp, said he was hit not once but twice — first by Tropical Storm Debby and later by Hurricane Helene. “We weren’t anticipating this,” Doepp said. “A lot of us in this neighborhood didn’t have flood insurance because, well some of us did, but then they told us it wasn’t a necessity because weren’t living in a flood zone anymore.”
When Debby flooded homes in the area, many residents found coverage either lacking or absent.
New Option: Catastrophe Savings Accounts
Under the new law, Georgia will allow residents to open catastrophe savings accounts that are exempt from state income tax. Homeowners can save up to $25,000 per year in these accounts, or up to $250,000 without insurance, and use the money to pay for repairs after a declared emergency.
Georgia State University law professor Samuel Donaldson said the accounts are intended to fill important gaps that insurance may leave behind. “Georgia is just one of a handful of states that allows this,” Donaldson said. “It shows that in our neck of the woods we’re sensitive to the fact that homeowners probably want more coverage than they have.”
Mann and Doepp said they have not yet opened catastrophe savings accounts, but both think the accounts could have helped after last year’s storms. “If it saves us money, then yes,” Mann said. “Oh yeah most definitely. I wish I would have done that then, but I didn’t know. Nobody ever knows until you go through it,” Doepp added.
What This Means for Homeowners
The accounts are designed to be used after a declared emergency; details such as eligibility, how withdrawals are documented, and interaction with federal disaster assistance will be governed by implementing rules and guidance from state authorities. The law’s supporters say the accounts give homeowners another tool to recover faster when insurance falls short or is unavailable.
The measure went into effect at the start of the new year.
Benefits of Catastrophe Savings Accounts
There are several key benefits to the new catastrophe savings accounts:
- Tax Advantages: These accounts are exempt from state income tax, making them an attractive option for homeowners looking to save for disaster-related expenses.
- High Contribution Limits: Homeowners can contribute up to $25,000 per year, or up to $250,000 if they don’t have insurance coverage.
- Flexibility: The funds can be used for repairs following a declared emergency, providing financial support during critical times.
- Complement to Insurance: While not a replacement for insurance, these accounts can help cover costs that insurance may not fully address.
Challenges and Considerations
Despite the benefits, there are challenges and considerations for homeowners looking to take advantage of the new law:
- Awareness: Many residents may not be aware of the existence of these accounts, which could limit their use.
- Documentation Requirements: Withdrawals must be properly documented, and homeowners need to understand the process to avoid complications.
- Interaction with Federal Assistance: The accounts may interact with federal disaster assistance programs, so understanding how these programs work is essential.
Future Outlook
As the new year progresses, more Georgians may begin to explore the option of catastrophe savings accounts. With the potential to provide financial relief during times of crisis, these accounts could become an important part of disaster preparedness for many households.
Supporters of the law believe that by offering this additional resource, Georgia is taking a proactive step toward helping its residents recover more effectively from natural disasters. As more people become aware of the benefits, the impact of these accounts could grow significantly in the coming years.
