H.R.827 - Homeowners’ Defense Act of 2025 (119th Congress)
Summary
H.R.827, the Homeowners’ Defense Act of 2025, aims to ensure the availability and affordability of homeowners' insurance coverage for catastrophic events. It establishes a National Catastrophe Risk Consortium to assess and mitigate risks, provides catastrophe obligation guarantees to state insurance programs, and offers reinsurance coverage for eligible state programs. The bill also includes a mitigation grant program to help homeowners prepare for and recover from natural catastrophes.
Expected Effects
The Act is likely to result in increased availability and affordability of homeowners insurance in states prone to natural disasters. It could also lead to improved mitigation efforts and faster claims payments after catastrophic events. The federal government would play a larger role in supporting state-sponsored insurance programs.
Potential Benefits
- Increased availability of homeowners' insurance in high-risk areas.
- Reduced financial burden on homeowners after natural disasters.
- Encouragement of mitigation efforts to reduce damage from catastrophes.
- Faster claims payments and improved financial recovery.
- Promotion of private market capital use for catastrophe insurance.
Potential Disadvantages
- Potential for increased federal debt through debt guarantees and reinsurance programs.
- Risk of moral hazard, where states and homeowners may take fewer precautions knowing federal support is available.
- Possible inefficiencies in the administration of the federal programs.
- Potential for cross-subsidization between different property and casualty insurance lines.
- The program's effectiveness depends on the accuracy of risk assessments and actuarial pricing.
Most Disadvantaged Areas:
Constitutional Alignment
The bill's alignment with the Constitution is based on the interpretation of the General Welfare Clause (Article I, Section 8), which allows Congress to provide for the general welfare of the United States. The establishment of federal programs to support state insurance initiatives and mitigate disaster risks can be argued as promoting the general welfare. However, some may argue that it infringes upon states' rights by creating federal oversight of state insurance programs.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).