Are You Underinsured?
Most Alabama families have insurance — but coverage on paper and coverage that holds up in a real claim are two different things. Here are the five most common coverage gaps we see when TCDS reviews a new client's existing policies, plus a quick checklist to assess your own situation.
Gap 1: No GAP Coverage on a Financed or Leased Vehicle
If your $38,000 car is totaled, the carrier pays the actual cash value at the time of loss — typically $28,000-$32,000 after 18 months of depreciation. If you owe $35,000 on your loan, you still owe the lender $3,000-$7,000 out of pocket after the claim. GAP insurance covers this difference. It typically costs $30-$60/year added to your auto policy. Check: do you have GAP coverage on any vehicle where you owe more than it's worth?
Gap 2: Insuring Your Home at Purchase Price, Not Rebuild Cost
Market value and rebuild cost are not the same number. A $280,000 home purchase price includes $60,000-$80,000 in land value that can never be damaged. The rebuild cost (labor + materials at today's prices) might be $190,000-$220,000. Some policies set Coverage A at the purchase price, leaving clients over-paying for dwelling coverage while potentially under-insuring at rebuild cost. Check: does your Coverage A match what it would cost to rebuild your home at today's construction rates?
Gap 3: ACV Roof Instead of RCV
After a hail claim on a 15-year-old roof, an ACV policy pays depreciated value — often 20-30 cents on the dollar for older shingles. A $22,000 roof replacement might yield a $5,000 check. RCV policies pay full replacement cost regardless of age. Check: does your home policy have replacement cost or ACV coverage on the roof?
Gap 4: Life Insurance Below 10x Income
The rule of thumb for term life coverage is 10 times your annual income. A $75,000/year household with $200,000 in term life is at 2.7x — enough to cover a year or two, not 20 years of income replacement for dependents. Term life is inexpensive: $500,000 in coverage for a healthy 35-year-old typically costs $25-$35/month. Check: is your life coverage at least 10x your gross annual income?
Gap 5: No Umbrella Above Minimum-Limit Auto and Home
If you carry 25/50/25 auto limits and $100,000 home liability with no umbrella, a serious at-fault accident or a guest injury lawsuit can exceed those limits and reach your personal assets. A $1M umbrella costs $150-$200/year. Check: do you have a personal umbrella policy?
Next Step
If you answered "no" or "I don't know" to any of the above, call TCDS at (205) 847-5616 or request a free coverage review online. We'll look at your current policies and identify where your actual exposure is.