Updated almost 5 years ago on . Most recent reply
Insurance Quotes - Dwelling Coverage
I'm reviewing quite a few insurance quotes for a real estate purposed I'm considering.
While the dwelling coverage (Coverage A) limits vary in these quotes, the limit in a number of these quotes is around 30% less than the appraised value.
Is these normal? When you buy property insurance for investment properties, do your policies often have dwelling coverage 30% below the appraised value?
I appreciate your help!
PJL
Most Popular Reply
The appraised value includes land. In places like the Bay Area that can be a large fraction of the value. You are insuring the structure only. So for example my structure is worth about 50% of the appraised value and that's what the insurance coverage is. But for cheap Midwest properties it's reverse. Rebuild cost will be higher than purchase price and your insurance coverage may be more than appraised value. In which case the best thing that can happen is your house burns down! :-)