Home Insurance Articles
Recovery Reimbursement Programs and Your Home Insurance
2010-06-08
In 2009, Congress passed the American Recovery and Reinvestment Act, also known simply as the Stimulus Bill. It provided for almost $800 billion in federal spending to help the nation recover from the recession, and at the time, was one of the largest infusions of public money into the national economy. While the programs and projects funded by the Stimulus Bill crossed all sectors of the economy, many were designed specifically to assist homeowners and first-time home buyers. Several of these programs have a direct impact on the cost and availability of home insurance.
The Stimulus Bill established an $8,000 tax credit for first-time home buyers for purchases made before the end of the 2009 calendar year. This credit was later extended for purchases through April 30, 2010, and further extensions or similar credits may come in the future. If a first-time home buyer cannot use the entire $8,000 credit to offset federal taxes owed, the remainder of the credit will be returned as cash to the buyer. This program is designed to increase the number of home sales, and by extension, to expand the pool of people in need of a home insurance policy. The expanded pool helps keep insurance costs down for everyone, and the cash reimbursements of the unused credits can assist new home buyers in being able to obtain an affordable quote on home insurance.
Also included in the Stimulus Bill, was a program to reimburse local communities for the costs of managing or purchasing foreclosed or abandoned properties. This program has an impact on all of the property owners in an area. If foreclosed or abandoned properties are allowed to fall into disrepair, property values across the whole community will decline. Moreover, abandoned properties are at higher risk for vandalism and fires that could spread to adjacent, occupied properties. Without such a program of neighborhood stabilization, insurance rates for the remaining homeowners in the area could potentially skyrocket.
A final portion of the Stimulus Bill with an effect on home insurance is a program to promote home energy efficiency through tax credits and grants. This program encourages home owners to replace out-dated, inefficient heating and air-conditioning systems, as well as older household appliances, with newer, energy-efficient models. Besides encouraging energy conservation and development of the green sector economy, the more efficient appliances and systems actually make a home safer, resulting in potential savings on any home insurance policy.
When homeowners are in need of an affordable quote on home insurance, they should consider the impact that the Stimulus Bill might have on their total housing costs, including insurance. Some of the programs may no longer be available, but many still are.