Apartment insurance question cash value or replacement cost?

[Andy N.]

This is to anyone who owns an apartment complex. How are you insuring your buildings? I have seen where they can be insured for agreed value, cash value, and replacement cost. I am curious how you all are doing it? I will be closing on a 48 unit soon. I always like to hear what others are doing. Thanks in advance. Andy

[Account Closed]

@Andy N. Actual Cash Value "ACV" is almost never used in quality apartment complexes. The cost savings is minimal you are at the mercy of the adjuster and have substantially limits coverage for roof damage (roofs are depreciated around 7% a year meaning you are out of pocket for 45% of a 7 year old roof). 

With agreed value you and the insurance company agree to a value of the property before the policy is issued, In the event of a covered claim you will receive the cost to replace anything damaged up to the agreed value amount. @Dennis Tierney regarding old unique buildings many insurance companies will agree to a value that represents a replacement cost using current construction methods which can be more cost effective the using ACV.