Replacement value double actual value - how to insure at lowest cost?
We own seven multifamilies, with about 18 units, in a town where the cost of rebuilding is double what the properties are currently worth (even though they're all mostly renovated, in good shape, and bringing in an excellent return on investment). The properties would probably sell in a range of 120,000 to 200,000 each, on average about 160,000. If they were to burn down, we would NOT want to rebuild, since if we did, the properties would immediately be worth half the cost of rebuilding, because of the location. We would want to simply take the money and invest it elsewhere, possibly in an existing multifamily in the same town, since we could buy a similar property for 150K, whereas the cost of rebuilding would be 300K. We don't want to insure them for replacement value and then take the money instead of rebuilding. We just want to insure them for their appraised value, as appraised by the town assessor. We currently have them insured for about the town's appraised value of each of them. The properties are coming up for renewal, and we've put them out as a package to two different insurers, both of which refused to insure them for less than replacement cost - which means we're having to pay a lot more than we should for insurance. But they both said it would be "unethical" to insure them for less than replacement value.
I figure that there have to be other owners of rental properties in depressed areas who can give us some advice. The properties are in New Britain, CT.