BiggerPockets

I have a 2 story duplex...3 bd 2 ba 1650 sf each unit. The insurance company came up with a replacement cost of $412,000. I don't want to pay premiums for this much coverage. If a total loss were to occur, my plan would be to rebuild either a 1 story sfh or a 1 story smaller duplex(825 sf each unit). Either way I would be on the same foundation/footprint. So as long as I am insured for the approximate replacement cost for a total of 1650 sf ($190,000+/-) I would be covered correct? Is this allowed by insurance companies?

Shawn,

The replacement cost estimates does seem a little high. I suggest you ask to see the agent's/underwriter's replacement cost estimate (the detailed report). Review the inputs (it's not rocket science) and check for accuracy.

The software used is likely from Marshall & Swift/Boeckh. It estimates the cost to rebuild, which is higher than new construction.

Trying to get coverage for less than 100% replacement cost is a challenge and not a good strategy.

If you insure for less than the 100% estimated reconstruction cost (of what you have) you'll likely get a coinsurance penalty on any partial losses.

It would be a challenge to get a policy customized to do what you want. You'll probably spend more time than premium savings would warrant, and the probability of it working the way you want in a claim is low.

Simpler to save premium with a higher deductible.

Claims experience shows its near impossible to salvage a foundation in a total loss (time and liability concerns for whomever is rebuilding on top of the old foundation). Ask for the endorsement to cover the foundations.