WASHINGTON--A group of legislators introduced legislation today requiring the National Flood Insurance Program to provide "all-perils" coverage for homeowners and small businesses.

The legislation (H.R. 920) would raise the limits of coverage currently paid under the NFIP, and the draft measure mandates that "actuarially sound" rates be charged.

"The Multiple Peril Insurance Act would allow homeowners to buy insurance and know that all of their damage from wind and water will be covered," Rep. Gene Taylor, D-Miss., said in a statement he sent to members of Congress last week seeking to win as many co-sponsors for the bill as possible.

Other co-sponsors will include Rep. Bobby Jindal, R-La.

The measure comes in the wake of Hurricane Katrina where many coastal property owners, whose homes were destroyed by storm-surge waters and wind, were told by insurers that their claims were noncompensable because of flood exclusion language in policies.

Mr. Taylor said under his measure property owners with a loss "would not have to hire lawyers, engineers and adjusters to determine what damage was caused by wind and what was caused by flooding."

Mr. Taylor filed suit against his own insurer, State Farm, after his Gulf Coast home was destroyed by Hurricane Katrina. He recently reached a settlement with the company.

While the bill is expected to have broad support in the House, its chances in the Senate are less clear.

The Senate held up passage last year of legislation reforming the NFIP and providing more lending authority for claims because some members of the leadership--including Sen. Richard Shelby, R-Ala., then chairman of the Senate Banking Committee--demanded stringent limits on the types of property for which insurance would be provided.

This created problems for such senators as Libby Dole, R-N.C., and Mel Martinez, R-Fla., who thought the limits would hurt the housing market in coastal areas in their states.

Under Sen. Shelby's plan, Congress would wipe out the NFIP's current $23 billion debt to the government, but require it to remain solvent going forward.

The companion House bill was far more liberal.

Mr. Taylor's new measure requires premiums for the optional coverage to be based on risk, "so that the program would be required to collect enough in premiums to pay claims," he said. "Otherwise, it would operate much like the flood insurance program."

Under the legislation, multiple peril policies would be available where local governments agree to adopt and enforce building codes and standards designed to minimize wind damage, in addition to the existing flood program requirements for flood plain management.

The bill would set residential policy limits at $500,000 for the structure and $150,000 for contents and loss of use.

Nonresidential properties could be covered to $1,000,000 for structure and $750,000 for contents and business interruption. "Once the program is enacted, a private market should quickly develop for policies above the limits," said Mr. Taylor.

This article posting was updated at 4:21 p.m.

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Bill Would Have U.S. Provide All-Perils Cover

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