As we’ve discussed before, investing in real estate is a big deal. For many Americans, a home is in fact the largest investment they make in their lifetimes. One very important element of cultivating a successful real estate transaction is to make sure you protect it to the best of your ability.
Unfortunately, though, stuff happens. Any number of problems can and will occur to your home. It’s vital to understand the importance of properly insuring your property, and making sure you pick the right plan for your home. My team and I have given homeowners in the Gulf Coast evaluations on beach investments for years, and want to make sure you’re making informed decisions when that time comes for you.
Here are a couple talking points when researching insurance:
Understand Risk and Insurance Premiums
Buying a house on the Gulf is expensive, and danger looms from violent storms each season. Hurricanes cause billions of dollars in damage each year — houses are ruined and families are relocated. It’s a depressing reality of living in the Gulf. According to a June 2013 article from AL.com, the 14 states that border the Gulf of Mexico and Atlantic Ocean experienced an increase in homeowners insurance by a MINIMUM of 44%. The state of Florida rates nearly double to 91%.
It doesn’t take an advanced economics degree to understand the risk and cost involved insuring a beach house. The closer you are to a potential threat, the higher premiums you’ll have to pay. So, understand that the initial cost of your home and property taxes are only the beginning. Monthly or yearly premiums come with the territory, and leaving yourself uncovered could have disastrous consequences.
Common Types of Insurance
You’ll have several options to choose from when buying a home. Picking the right one for you ensures you both save money and stay covered.
- HO1: Basic Form — This is a standard policy that is used to cover your home against “standard” perils, such as fire, hail, vandalism. There are some exceptions for this type of insurance
- HO2: Broad Form — Similar to HO1, this form protects you against the basic perils, plus a few more. It also outlines specific perils for your coverage.
- HO3: Special Form — This is a more elaborate version of the first two, but is the baseline for most homeowners.
Classifications on each policy usually include insurance for your house, other structures (such as a pool house or garage), personal property, loss of living expenses (if you space is a rental, you must be covered if your tenant is forced out from weather), and additional coverage for specific perils.
Most policies don’t protect you from hurricanes, floods or Earthquakes, so make sure you do your due diligence in checking all your bases.
Any questions you have in the Gulf Shores area, please call us today. We offer comprehensive tips on getting your search for a home in paradise started, so don’t hesitate to reach out.