Over the last several months, people across the country have fretted about the ways in which potentially substantial increases in their home insurance costs will end up impacting their household bottom lines. However, it might be helpful for insurance agents to highlight to homeowners worried about the possible premium jumps that many states may allow them to deduct at least some of these expenses from their annual tax filings.
For example, in South Carolina, consumers have the ability to obtain a state tax credit to offset their home insurance costs up to $1,250 – a value which has more than quadrupled in recent years, according to a report from the Charleston Post and Courier. However, the problem is that many people in the state simply seem to not know about it, despite the fact that this “Excess insurance premium tax credit” has existed in the Palmetto State since 2007; for the 2012 tax year, only 2,400 people statewide had claimed the benefit, but that was up from just 511 in 2008.
Under state law, if home insurance costs on a primary residence are greater than 5 percent of adjusted gross income, the state will cover as much as $1,250 of the additional costs, the report said. However, this is not a refundable tax credit, meaning that consumers who did not owe the state at least that much money will not be able to receive any funds above and beyond their earlier returns. In addition, people who did not know about the tax credit in the past can file amended returns for as far back as three years to obtain the benefit.
What kind of home insurance qualifies?
Consumers who pay for coverage including flood insurance – which has been at the heart of the massive increases in home insurance costs – will certainly be able to claim the benefit in South Carolina, the report said. This is also true of people who have to pay wind and hail insurance, and even standard homeowners’ insurance.
This kind of benefit can help to offset significant home policy costs and it therefore may be a good idea for insurance agents to highlight these tax breaks to consumers who might be disquieted by premium hikes. Doing a little bit of research into the ways each of the states in which they operate allow such benefits to residents may help agents to keep their business robust.