Are you like most Gulf Shores homeowners when it comes to their homeowners insurance? We buy our policy and stuff it away, never thinking about it again until something happens and we need to file a claim? As our renewal notices come, we may take note of the increases, reluctantly writing out a check for yet another year of protection.
Automatically assuming that your Gulf Shores homeowners insurance coverage is sufficient year after year may be a given, but it can also cost you in ways you may not have considered. Let's look at some reasons why you just might want to pull out your Gulf Shores homeowners insurance policy today for a fresh review.
Gulf Shores Homeowners Insurance – What Changed?
Your Home Value
After several years of sharp retreats, home values are on the rise again. For many homeowners, the strong home values of years past may take many more years to reach again, but if you bought your home within the past year, you may be in for a pleasant surprise or a rude awakening.
That rude awakening can hit you if you were to file a claim following a total loss. For example, when you purchased your Gulf Shores homeowners insurance, you paid $375,000 for your home, a steal in your neighborhood. To replace your home today, you might pay more than $475,000, a difference of $100,000. Your home may not have been properly valued in the first place and with the recent increases in the Gulf Shores area home values, it may be worth a lot more than you think.
Market Value, Replacement Costs
Market values change, therefore it can be difficult for Gulf Shores area homeowners to know what their residences are worth from month to month. Basing your insurance coverage on market value is not the best option, rather you want insurance that is based on its replacement cost.
Replacement cost is preferred because it allows you to rebuild a home at its current location with comparable construction materials that were used in the home that you lost. You aren't at the mercy of ever-changing home values. Instead, your home is replaced whether home values advance or decline.
Many insurance companies insure your home for replacement cost rather than current value, knowing full well that prices may vary a great deal more than the cost to replace, should tragedy strike.
The Inflation Guard Option
You have another option when it comes to your Gulf Shores homeowners insurance: asking your agent to automatically include an inflation guard that adjusts your coverage to reflect changes in the cost of construction.
An inflation guard can be especially helpful if your home needs to be rebuilt and the building codes have been upgraded. Normally, you would have to pay extra to upgrade your home, but with an inflation guard in place so-called "ordinance" or "law" coverage would help close that gap.
If you're not sure whether your coverage is adequate for your needs, contact your insurance agent to discuss your situation. You may also want to shop around for insurance elsewhere, giving you the opportunity to compare prices and coverage options with competing insurers.
For more articles and tips on Gulf Shores homeowners insurance, check out our Gulf Shores Insurance section under Gulf Shores Real Estate Categories to your right.