From a Private Lender: Property Insurance Question

[John Jacobs]

I am the private lender on a single family home flip. The purchase price is $192,000. The rehab budget is $30,000. The ARV is $280,000. The flipper is experienced. I have lent on approximately 15 flips with other people before but this is my first deal with this flipper. I had asked that the property be insured for the amount of money that I have in the deal ($192,000 + $30,000 = $222,000). I would be listed as an additional insured on the policy. The insurance agent came back with a reconstruction cost of $167,300. So the flipper came back to me asking whether I wanted the home insured for $167,300 or $222,000. The flipper preferred insuring for the lower amount but was willing to insure for the higher amount if that is what I wanted. The flipper mentioned as an aside that the land on which the home sits would be "pricey" but did not provide an exact number to substantiate that claim. In my dealing with other flippers I have always had the property insured for at least the amount of money that I had in the deal. So in this case that number would be $222,000. What would you do here?