Sec. 1. 37-B MRSA §745 is enacted to read:

§745.__Disaster Relief Trust Fund

1.__Fund established.__There is established the Disaster Relief Trust Fund, in this section referred to as the "fund," to be administered by the agency.__The fund contains the proceeds of the surcharge deposited under subsection 2 and other funds received by the agency for purposes of disaster relief.

2.__Surcharge.__An annual surcharge is imposed as described in this subsection on insurance policies issued or renewed after November 1, 1997.

A.__The surcharge is $2 on each homeowner's or home contents insurance policy.

B.__The surcharge is $4 on each commercial fire, commercial multiple peril or business owner's property insurance policy.

C.__The surcharge must be paid by the policyholder to the insurer.__The insurer shall collect the surcharge and remit it to the Treasurer of State who shall deposit all amounts received to the fund.

D.__The surcharge is not part of the premium of the insurer.__ Nonpayment of the surcharge by the insured is a valid reason for cancellation of the insurance policy.

3.__Use of fund.__The fund may be used for the following purposes:

A.__For grants to municipalities and other eligible agencies for disaster recovery projects in accordance with agreements between the State Government and the Federal Government; or

B.__To provide disaster relief to municipalities for a localized disaster when the statewide impact is not sufficient to receive federal disaster assistance.

SUMMARY

This bill establishes a disaster relief trust fund to be administered by the Maine Emergency Management Agency to match federal disaster assistance funds and provide other local disaster assistance. The trust fund is funded by a surcharge on homeowners' and business property insurance policies.