How do you Insure your rentals

Question

As an investor do insure a property for what you or what you purchase for. I've noticed  in a policy  this makes the biggest  difference in pricing.

Bill B. · Answer

Replacement cost in Las Vegas through allstate for landlord policies are $500-$600 / year for $250k-$400k properties. I went with replacement as it was more coverage for $10-$20/year more. Many of my properties are in HOAs. So the replacement property would have to be almost exactly the same as the original house. You wouldn’t be allowed to build a cheaper house with your smaller than replacement cost insurance payment. I don’t know what they would do if you tried to take the payout and not rebuild. The land wouldn’t have much value as the buyer would basically have to build your with few design or size options.

John Teachout · Answer

Most insurance companies insure for "replacement value" which means they base your premium on what it would cost to build a new structure to replace your old ratty one. This can make the premium unreasonably high. Some companies allow "stated value" insurance which can bring the price down. For example, it may cost $120,000 to rebuild your 3 bedroom house but maybe you only want to insure it for $40,000 because you paid $30,000 and that would make you whole.