Actual Cash Value versus Full Repair Cost

[John Jacobs]

I am going to be lending to an investor on a single family home. There will be renovation of the home that is $82,500 worth of renovation. The Homeowners Insurance will include Builder's Risk. During this renovation period would you, as the lender, want an Actual Cash Value or Full Repair Cost policy in place?

[Steve Hiltabiddle]

@John Jacobs I require my borrowers to have policies that cover replacement cost.  Actual cost takes into account depreciation so complete destruction of a property could leave you under water in terms of the amount paid for the loss. Replacement cost would be what it costs to replace the structure.  

good luck

Steve