ACV vs RCV for Flip Scenarios

1 Reply

I've seen many related discussions on the boards here - but none that explicitly address what I'm looking for - at least in simple terms.

Here's the scenario:

  • Project:  Rehab and flip, own for less than 6 months
  • House built: 1930
  • Purchase price:  $34K
  • Estimated rehab cost:  $50K
  • ARV: $130K

Here's what I'm looking at w/ respect to a quote I'm ready to go with:

  • Vacant/Builders Risk Insurance, 6 month policy
  • Coverage amt:  $130K, ACV (gathering RCV is not available industry-wide for house this old)
  • Co-insurance: 80%
  • Liability:  $500K
  • Theft:  $5K

My question is basically - would this be considered sufficient coverage? I basically want to be able to recover - in the event of a catastrophic loss - for at least the purchase price amount + any amount I've put into it up to the point of loss (preferably the ARV if loss occurs after rehab is complete but before it sells). Trying to understand the insurance discussions generally bends my head - so if someone can give me the scoop in very simple terms I would be ever so grateful.



@Vaughn Lewis  

given the short time frame there is a 99% chance the insurance carrier will only give you your $ invested and not the value you are creating.  The ACV and 80% co will be a factor if you are insuring for a low value per sq/ft (under $80 per sq/ft.

Also, there are other insurance options that are on a month to month policy and will give you RC.  I will send over in PM.

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