Specialist · Portland, OR · Member since 2013 · 93 posts · 29 votes
11y
@Johann Kleisch My first question is what are you looking to insure? Do you have personal belongings/property in the rental unit? Are you just talking about the structure?
For property, I generally set my clients up with Replacement cost. For what they do, Replacement cost makes it easier to pay for the loss and replace what is damaged/lost. ACV has depreciation, so if you have a loss and you paid full brand new price, you may be losing some decent cash. However, if you are getting materials/property at a used/discount price, then you may still come out ahead. Either way, RC has benefit in my eyes as it counts today's cost. So, furniture for example, that $1,000 couch you found on sale for $500, will be looked at as today's cost of $1,000 to replace brand new.
I strongly recommend finding an independent insurance broker in your area to help research options and rates. Independent can shop many companies at one time saving you time and energy to focus on your deals while making sure you are not wasting money on expensive policies.
When you find a good agent to add to your "team", have them shop rates, then see what it would cost for the different coverage options there. Have your agent figure the break even point as in, ACV vs RC, is it going to increase your premium substantially vs how much more are you going to save on depreciation? If so, it might be better to do ACV and just offset the depreciation with your own funds (basically saved from the premium costs.)
Summary, and what I usually look at with my clients, does it cost much more to add RC? If not, then lets turn that tragic loss into a win and replace with some brand new items. Hope that helps with some perspective from an agent point of view.
Residential Real Estate Agent · Shawnee Mission, KS · Member since 2013 · 7 posts · 1 vote
11y
Hi Johann,
This is going to depend on a few factors. One is how much you have invested in the property and if you would forgo the expense to rebuild the property if it. If you are going to rebuild then replacement cost coverage would be the best option for you. If you would not because the property was inexpensive then insuring to actual cash value may be a better idea since you may just clean up the lot, sell it, and buy a property down the street.
This is interesting. Could you be mandated by a third party (historical society, mortgage company, neighborhood association) to purchase replacement cost v actual cash value?
Specialist · Portland, OR · Member since 2013 · 93 posts · 29 votes
11y
@Johann Kleisch My first question is what are you looking to insure? Do you have personal belongings/property in the rental unit? Are you just talking about the structure?
For property, I generally set my clients up with Replacement cost. For what they do, Replacement cost makes it easier to pay for the loss and replace what is damaged/lost. ACV has depreciation, so if you have a loss and you paid full brand new price, you may be losing some decent cash. However, if you are getting materials/property at a used/discount price, then you may still come out ahead. Either way, RC has benefit in my eyes as it counts today's cost. So, furniture for example, that $1,000 couch you found on sale for $500, will be looked at as today's cost of $1,000 to replace brand new.
I strongly recommend finding an independent insurance broker in your area to help research options and rates. Independent can shop many companies at one time saving you time and energy to focus on your deals while making sure you are not wasting money on expensive policies.
When you find a good agent to add to your "team", have them shop rates, then see what it would cost for the different coverage options there. Have your agent figure the break even point as in, ACV vs RC, is it going to increase your premium substantially vs how much more are you going to save on depreciation? If so, it might be better to do ACV and just offset the depreciation with your own funds (basically saved from the premium costs.)
Summary, and what I usually look at with my clients, does it cost much more to add RC? If not, then lets turn that tragic loss into a win and replace with some brand new items. Hope that helps with some perspective from an agent point of view.