Insuring beach home
I'm in the final stages of purchasing a beach home that I will be using as a short term rental. On review of insurance I'm terrified of being under insured and could use some advise on what I should be doing. The quotes I'm getting seem to imply my coverage is far less than what I'm purchasing the home for.
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Find out whether the quote is actual cash value (ACV) or replacement cost estimate (RCE). A lot of insurers are offering ACV as a way to keep premiums down in high cost areas. The tradeoff is that ACV brings depreciation into the value - so if a roof has to be replaced and costs $30k, but it's ACV was only $5k at the time of loss, then insurance is only paying $5k. Make sure you have coverage for hurricanes/wind and hail. If you have a lender on the purchase, I'd be shocked if they allow you to proceed with insufficient insurance. We dig into the quote to make sure the collateral is sufficiently protected.