Homeowners insurance becoming more expensive in struggling economy

Homeowners Insurance

Homeowners Insurance

Contrary to predictions, prices are on their way up in the United States.

The American economy’s burp in the second quarter brought about an unexpected annualized 1.5 percent from having been 2 percent, and this slowdown is having an impact on homeowners insurance.

A survey of American economists by Bloomberg had predicted a drop to 1.4 percent.

Though the struggling economy is living up to expectations, a great deal of the slowdown at the moment is in large investments such as buying homes. As people with liquidity are less inclined to invest and are saving their cash instead of confidently spending it, it creates a marketplace that sends homeowners insurance premiums upward.

The reason is that homeowners insurance can’t sell new policies if there are no changes in real estate.

If existing houses are not being sold and new ones aren’t being built, then there is a reduced need for new sales. This slumping activity means that businesses – including homeowners insurance companies – aren’t investing as much, as the risk is too high in this economic environment. Therefore, the insurers are relying more heavily on premiums to bring in the income that they require to make their claims payments and meet their other financial obligations.

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At the moment, the struggle is that Americans are not feeling confident in their immediate financial future. It is a feeling of teetering on the edge, where there is potential for improvement, but there is fear of decline.

There is high potential that the government will be able to provide the economy with a massive boost as a massive decrease in federal spending – primarily in defense programs dating back to George W. Bush – take place. Though there will also be some payroll cuts and tax cuts – also dating to the time of that president – the impact on the everyday American has yet to be seen.

What is known is that at the moment, homeowners insurance companies, like everyone else, are attempting to keep their money in places where it will be safe, such as protected accounts or overseas. The owners of the houses themselves are making do with what they have or are currently struggling to find employment to be able to pay their mortgages. Unfortunately, this shrinkage in new business can only cause premiums to rise.

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