Rebate program likely to increase auto insurance purchases

Thousands of Americans will have a new reason to shop for auto insurance policies thanks to a new government program aimed to encouraging new car purchases.

Thousands of Americans will have a new reason to shop for auto insurance policies thanks to a new government program aimed to encouraging new car purchases.

A report in the Kansas City Star notes that the federal government is expected to release final regulations on the Cash for Clunkers program, which will distribute $1 billion to consumers in the form of rebates for new car purchases.

According to the Star, drivers who purchase a vehicle that gets at least 5 miles per gallon in fuel economy will be eligible for a $4,500 tax credit, while those purchasing vehicles that get between 2 and 4 miles more per gallon will get a $3,500 credit.

A separate report from Reuters notes that dealers are already preparing incentives for the program, and that a previous federal incentive allows consumers to deduct taxes they pay for vehicle purchases on next year's tax returns.

Reuters also notes that the program is set to run through November 1 or until the $1 billion in funding is exhausted. With a goal of selling 250,000 cars nationwide, the program is likely to motivate many Americans to shop for new auto insurance policies as well.

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Posted: July 14, 2009

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