Trump Tax Breaks and Insurance Rates
Tax Breaks and Homeowners Insurance: These consumer groups estimate that a 5 percent reduction in premiums would be worth roughly $25 billion nationwide.
It’s possible that the recent tax cut bill passed by Congress could end up lowering your insurance rates as well. Two separate consumer groups are calling for a premium cut for consumers and businesses across the nation. They are asking for an average 5% premium decrease because the new tax bill has slashed the corporate tax rate.
Recently, the Consumer Federation of America and the Center for Economic Justice sent a letter to the insurance commissioners in every state in the country asking them to get involved and order rate cuts due to the fact that insurance companies received a major windfall due to the new tax rates.
These consumer groups estimate that a 5 percent reduction in premiums would be worth roughly $25 billion nationwide.
In every state in the country, insurance companies must have their rates approved by state regulators and part of the review involves how much profit they are making on premiums. Because the corporate tax rate was recently cut from 35% down to 21%, insurance companies profit should be headed up, which is why these two consumer groups feel a premium decrease is in order.
- Robert Hunter, the CFA’s director of insurance and former Texas insurance commissioner said in a recent article, “Unless commissioners ensure that companies lower their rates, drivers, homeowners and businesses will be stuck overpaying for coverage” by an estimated $25 billion.”
Rate reductions would vary depending on the type of insurance, but consumer groups are definitely calling for reductions in property and casualty insurance but feel that the cost of life insurance should also be adjusted.
Will States Decrease Premiums?
Whether or not consumers will actually see a decline in their premium will probably depend on where they live. It is up to the local insurance commissioner to decide whether to pursue a decrease and while some states will absolutely go after a price cut, others many not.
The California insurance commission has already announced that they will do a regulatory review of rates to see if a price decline is in order.
One the other end of the spectrum, a spokesperson for the Pennsylvania Insurance Department declined to comment in a recent article as to whether or not they will conduct a review or request a change in rates.
In North Carolina, where insurance companies recently requested an 18.5 percent average increase across the state, the insurance commissioner is already factoring in the tax break and recently rejected the rate increase request.
How to Lower Your Rates
Regardless of whether your state forces insurance companies to lower their rates or not, there are a few things you can do to lower your premium:
- Shop Around: Shop your coverage on a regular basis. Insurers rate risk differently so premiums can vary dramatically. Be sure to compare apples to apples in regards to deductibles and coverage levels. Compare Homeowners Insurance Now!
- Raise Your Deductible: Doubling your deductible can result in a significant premium reduction but make sure you can easily afford your deductible in the event that you have to make a claim.
- Upgrade Your House: Upgrading your house with a few safety features can help reduce your premium. Adding storm shutters, replacing your roof with wind resistant materials or putting in a monitored security system will all lower your premium.
- Ask for Discounts: Insurers offer a variety of discounts so make sure you are getting all of the discounts that you are qualified to receive. Ask your agent to do a discount review to make sure all discounts are being applied to your policy.