coverage questions

2 Replies

I'm buying my first investment property, and have questions about the property insurance.  The quote I received was for General Liability (100,000/200,000), and the Building Coverage is for 70,000.00.  

The purchase price of the home is for $75,000.  It also has a 1000.00 deductible, and uses actual cash value in the valuation, rather than, replacement cost.  Does anyone have an opinion in terms of whether or not I'm getting enough coverage or if I'm missing anything that I should be getting. Thanks.

@Fred Stevenson  

Actual Cash Value is acceptable if you are insured to a reasonable rebuild cost per sq/ft.  So if the home is 700 sq/ft, you are at $100 a sq/ft and will most likely not be under insured when there is a loss.  But if the home is 2100 sq/ft, & you are insured @ $33.33 per sq/ft, you will most likely get a partial payment at the time of a property loss.  Replacement Cost eliminates this issue but the insurance company will require the building to be insured to a current rebuild cost per sq/ft.

Also, $100,000 per occurrence seems low.  You should be able to raise this to $500k or $1M for very little additional $.

Hope this helps

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